As partial of his spring matter on Tuesday, the Chancellor announced a call for justification on enlivening cashless and digital payments.
In papers expelled alongside Philip Hammond’s refurbish on the UK economy, it was suggested the Government wants to know possibly the “current denominational brew meets the needs of cash users”.
In a paper patrician “Cash and digital payments in the new economy: call for evidence”, Treasury officials prominence how – as the use of cash declines and contactless remuneration increases – the stability estimate and placement of coppers may not be cost effective.
It is remarkable how 60% of 1p and 2p coins are only used in a transaction once before leaving circulation, with coppers then possibly saved or, in 8% of cases, thrown away.
It is estimated the Royal Mint has indispensable to furnish some-more than 500 million 1p and 2p coins any year to reinstate those descending out of circulation.
But the cost of estimate and distributing these low description coins is the same as aloft description coins.
This means there is a high cost to gripping 1p and 2p coins in dissemination relations to their face value and stability usage, the paper adds.
It is also highlighted how some businesses are rounding prices to equivocate the need for coins such as 1ps and 2ps, or environment vending machines not to take some low denominations.
Meanwhile, the Government also wants to know possibly to keep the £50 note in circulation.
The Treasury request states the UK’s highest-value note is “believed to be frequency used for slight purchases”.
Despite “significant abroad demand” for the £50 note, the paper highlights how it is “mainly held as a store of value alongside other currencies such as the dollar and euro”.
Officials also advise there is a “perception among some that £50 records are used for income laundering, dark economy activity, and taxation evasion”.
On rethinking the UK’s cash denominations, the paper states: “From an mercantile perspective, having vast numbers of denominations that are not in demand, saved by the public, or in prolonged term storage at cash processors rather than used in dissemination does not minister to an fit or cost effective cash cycle.”
The call for justification will close on 5 June, with the Government welcoming responses from “anyone with an seductiveness in the questions raised”.
Rupert Harrison, former arch of staff to ex-chancellor George Osborne, suggested on Twitter the Treasury had formerly deliberate scrapping some denominations but had been vetoed at the time by Number 10.
“But, it’s still a good idea,” he posted, highlighting how there is a “global pierce to proviso out big notes” due to fears they are especially used illicitly.
Sarah Coles, personal financial researcher at investment government organisation Hargreaves Lansdown, said: “The essay looks to be on the wall for 1ps and 2ps.
“When it costs some-more to furnish and discharge a silver than the silver itself is worth, governments tend to confirm it’s a spent force – and we’re fast streamer in that instruction for coppers.”