Bonus episode: Bank of England's Victoria Cleland on the future of cash - and wildlife on banknotes

0:00Welcome to a This Is Money podcast special on the future of cash. I'm Lee Boyce and joining me today is Chief Cashier of the Bank of England, Victoria Cleland. Welcome to the show, Victoria. The future of cash feels at risk. Why is preserving choice in payments important? I think there's still a lot of people who are using cash, so I don't think its future is at risk yet. There's a whole reason that the cash industry needs to keep it alive. I think that it's really important that everyone in the country has a choice in the way that they pay. Some people prefer cash, some people prefer cards, some people prefer digital wallets.

0:36And I think that choice is important, both in terms of what the consumer wants to do, but choice can also provide resilience. And giving choice, I think, also sort of adds a bit of innovation into the system as well. So presumably, then, you don't fear that cash is going to die out anytime soon? No, we're still seeing very strong demand for cash from certain segments of society and they are really important segments. So about 2.6 million people in the UK are heavily dependent on cash. Another group are sort of keen cash users and use it at least once a week. and sometimes people are driven to cash for budgeting reasons.

1:18Sometimes more vulnerable people just find it easier to use cash. Some people prefer the privacy from it. So those people could use it regularly. We're increasingly seeing people holding some cash as contingency. Last year there were some big power outages in Spain, Portugal and card systems were down but cash could be used so people see it in that way and some people still like the tangibility of cash in knowing that they have got a little stack somewhere safe. It's safe to say that quite a fair few retailers now no longer accept cash. How do we kind of stop Britain from going totally cashless and encourage retailers to accept cash?

1:58I mean, it's a really good question because there's no point in the Bank of England providing cash and we've said we'll keep producing cash as long as the public want it if they can't spend it. There are some retailers who are deciding against using cash for various reasons. I'm also increasingly seeing retailers who are now preferring cash. I think in London, it's a fairly sort of non-cash society out in the countryside. I was in Wales yesterday talking about banknotes to school children things. I needed cash for a couple of the places I went. But even last week in London, I was going to a gallery, big sign, cash preferred.

2:37Some merchants prefer cash. They find it sort of cheaper to use. I think that what we need to do to make sure that cash does stay real is, I mean, first of all, the Bank of England needs to keep issuing cash. We need to issue cash that people can trust, which means it's really important that we keep strong security features on that. And we'll soon be sort of issuing some new bank notes with new security features and also new imagery with animals. We need the cash industry to keep circulating the cash, so cash and transit um the cash centers are also really important and we're seeing a growing number of banking hubs across the uk which is sort of almost a one-stop shop where people can go to get cash in those ways so we need to work on that whole infrastructure we need to remind people about the importance of cash that sort of choice optionality but also keep coming back to the sort the vulnerable people who really rely on it.

3:37I also think it's important to teach school children about cash. And I actually did something very similar a couple of years ago where I spoke about banknotes and cash. I was quite interested to see the attitude of children and their views on notes and coins. At a banknote conference last month in Washington, you talked about the paradox of cash. And you said, well, cash is used less frequently for transactions. Notes in circulation continue to grow. What's the reason for that? It's something that we're seeing in the UK, but we've also seen it in a significant number of other countries as well.

4:12And we think there are a few drivers for that. I think more recently, we have seen people holding more cash as a contingency. So they'll be withdrawing it, not necessarily spending it. I think there's an element that as the cash cycle itself sort of slows down a little bit, because there's not quite so much cash in the machine to oil the wheels. I think that the slower turnover, so maybe shops banking their cash less frequently, wholesale processors processing it a bit less frequently, we think that that is using up a bit more of the cash. There is still a demand for cash internationally. In times of crisis, people do like to hold on to cash.

4:53So I think there are a number of drivers for that there isn't one absolute driver and that we've been looking into it and other countries are looking into it as well um i should say i went to washington last year and i went to the bureau of engraving and printing oh it's fascinating yeah absolutely fascinating place to go and if anyone's listening to this in washington i very much recommend booking a tour um lots of our listeners uh won't be heavy cash users and i know you've touched on this already that are elderly and vulnerable but you know what would you do to be would you encourage people to to be using cash more and thinking about cash you know we've a lot of us have moved away from using cash from our day-to-day lives should we be using more cash i'm gonna say it's very much sort of up to the public what means of payment they'd like to use and i'm not going to say you should use cash it's better than anything else because part of my other job is sort of helping design a new retail payments infrastructure and it isn't just sort of the vulnerably sorry the vulnerable in the elderly we're seeing quite a lot of younger people prefer cash as well again sometimes it's that budgeting side of it sometimes it is they just don't want to sort of their bank to be looking at everything they're spending so there are a lot of sort of drivers behind it and so to my mind choice is the most important thing I know that some countries have actively said to some of the population we really advise you to hold cash in case there is an emergency and some of them go as far as saying and we encourage you to provide particular types of and store particular types of food stuff and things we're not at that stage here but I think people are increasingly thinking oh yeah it's always good to have some cash just in case.

6:41Yeah no I agree and the House of Laws recently announced the National Resilience Committee looking at whether we should hold reserves at home so i kind of think there is a little bit of that kind of happening at the moment outside of of the bank of england now one thing i was going to ask you about just and i've noticed this more and more so for example uh car parks a lot of them have stripped out coin and card machines placed in this sort of qr code app systems right and i'm exactly i agree with you i think choice is paramount paramount and cash isn't my first payment method but i do always carry cash for you know whether something doesn't take card or whatever.

7:16How do we avoid situations like this where, you know, that does feel like it's excluding people that perhaps don't have a phone or perhaps just don't feel like, you know, comfortable scanning a random QR code? How do we sort of convince, you know, things like that? The little silly, it feels like little silly things but quite frustrating for people, I'd say. Yeah, I mean, they're not little and silly. They're sort of a key part of everyone's daily life and I can't speak on behalf of the sort of car park owners and things. I think, They'll be looking very carefully at sort of efficiency, but demand and supply.

7:49And I think if they saw there was an increased demand to introduce sort of cash again. So I think it's if people and your listeners really feel strongly about it, it's letting people know that actually I would prefer to use cash for this. It would make it easier. I'm more likely to park here. Yeah, that's fair enough. And you said in your closing statements in Washington that to preserve choice, we need to keep cash relevant. How do we keep cash relevant? So I think keeping it relevant is still talking about it, not making it look like an antique or being surprised if someone sort of opens their wallet.

8:23But I think from a Bank of England perspective, we're really keen to make sure that cash is sort of reflecting the best security features. There's loads of science, loads of technology in banknotes. We can talk about it in that way. we're going to launch the next series of notes will include wildlife which is something that really resonated with the public so I think that's something that will engage them more but we need to make sure that the cash industry and financial institutions are sort of providing cash when it's demanded and not putting up too many barriers to do that so there's certain sort of guidelines and the financial conduct authorities involved around this in terms of proximity to an ATM in urban areas, proximity to ATMs in rural areas to make sure that it is there for people to get hold of and then for people to spend in shops, supermarkets and things.

9:22That's great. Your name is on banknotes from 2014 to 2018 as chief cashier and you became chief cashier again last year so you named back on notes again. That must feel pretty cool right to know your name is on banknotes. Yeah, it is really exciting. I think the first one that I took out of an ATM, there was an amazing thrill. It's never a job I thought about when I was at school. It's never even a job that most people think exists. But no, it's an amazing honour to be signing banknotes on behalf of the country. But there's a much more serious side to it in terms of actually the amount of work and effort that goes into producing a banknote.

10:07People just sort of fold them up, put them in the wallet. But if they stop and look, there's a lot of very intricate design. They're like mini works of art. There's a lot of technology. So the various security features that you and I can see, particularly the sort of holograms, and they can flip from spelling out five to spelling out pounds. there's other technology in there that only the sort of machines so if you sort of put some money into a self-service checkout that machine will be checking it is a genuine note atms will make sure they're dispensing genuine notes there's lots of technology there forecasting demand for cash is another key part of it and working with the cash industry so yeah the signing is definitely fun but there's a there's a lot there in a big manufacturing project too and you mentioned it the consultation that's happening in a moment, which closes on the 3rd of July.

11:01It's a public vote as well, isn't it? So the public can get involved and have their say on the shortlist of the wildlife that is on there. There's still time to go and take part in that. How many people have taken part so far, can you say? Yeah, no, it's a really exciting consultation we're running. So last year we asked the public what they would most like to see on the banknotes. Would they like to continue seeing historic figures? or we gave other options as well. And nature overwhelmingly sort of came out the favourite. So we've announced that we're going to move to animals. We've launched this consultation, which, as you say, closes on the 3rd of July.

11:40And we put a short list of 18 animals and we're asking the public to sort of tell us their favourites from each of three buckets, so to speak. Sorry, animals, you may not want to live in a bucket. and from that we'll then think how best do we get those across the denomination so we're looking for the central image for each of our four denominations of banknotes and so we're really keen to hear from the public which are the ones they'd most like to see on the notes because we want the public to engage with them we produce the notes for the public to use so yeah it's a great opportunity I understand it's been the source of many discussions over many sort of dinner and supper tables i've presented to a number of school children who've had fun designing banknotes and their own sort of animals on it so it's got it's got a real buzz but the serious side of it is that we are changing the security features to make the notes even more counterfeit resilience and that means we also change the images so having fun with the animals but the serious science behind it yeah and obviously that was the move to polymer notes um yeah sort of mid mid 2010s wasn't it to kind of have more of those security features uh put in there um i was looking through the 18 choices actually and i've got to say um i think i had to go for a common kingfisher for a five pound note and a brown hair for a 20 pound note i'm going to ask you the most difficult question here if you've got a favorite i'm not allowed to say i don't want to i don't want to lead the audience and one of the things that's really important to us is making sure we got to we get a good mix across the four notes because we want them to be very easily distinguishable for people and so we'll be and that's the reason why we've got these three sort of groupings that's a bit more polite isn't it animals um groupings and that's thinking a bit about their habitats as well so ideally we'd have something that is sort of for example um a sea animal maybe a sort of bird so you can get the flying and the flapping wings mammal that's maybe running around or on the grass and that means we can get different backgrounds and different types of movement and that will help the people to sort of distinguish between the notes and also hopefully focus their attention a little bit more to the security features.

13:59Yeah so that's the seriousness behind the world being right and that's I guess it really lends itself to the security features that you're talking about. I was told 400 ,000 people have yes yes sorry i got so carried away with excitement about animals i didn't answer that yes so we already had over 4 000 people responding to the consultation which is more than we've ever had on a sort of bank note design consultation and there's still a week to go so we close on the 3rd of july and it's just been fantastic to see how many people are engaging with this i think it shows that actually the animal theme is really resonate resignating with people right across the country yeah i mean that's it 400 000 is a huge amount isn't it to have taken part in in that um and as i say um if you are listening to this and you do want to go and have your say and vote for which animals you think uh should go on banknotes go and do it um and otherwise you're going to run out of time and victoria look thank you so much for uh your your views on cash uh and for giving us an update on the consultation.

15:07It's been really, really interesting. No, thanks so much for giving me a chance to talk about something I'm so passionate about. And yeah, hopefully your listeners will go to the Bank of England's website and nominate an animal. Thank you very much, Victoria. Thank you.