According to the Bank, which issues the most banknotes in the UK, approximately a quarter of all cash in circulation is being used to sell and buy things.
Some cash is being hoarded outside of bank accounts.
Much of the money is used illegally in the ‘shadow economy’ or held for travel money overseas.
‘Cash won’t die’
At the end of July, £62.6bn worth of banknotes were estimated to be in circulation, according to the Bank.
That figure is the equivalent of every person having £1,000.
Recent figures document that the use of coins and notes had been overtaken by cashless payments for the first time. Digital transactions with smartphones and contactless card payments are on the rise.
Despite this, the Bank’s report suggests that the number of banknotes in circulation has at least tripled over 20 years.
The Bank said: “Over the next few years, consumers are likely to use cash for a smaller proportion of the payments they make,”
“Even so, overall demand is likely to remain resilient. Cash is not likely to die out any time soon.”
‘Buried in the garden’
The report also suggested that last year, 21% to 27% of UK cash was being used in transactions at any one time.
The rest of the money was in other places, including being ‘buried in the garden’.
The Bank warned that “People may choose to save their money in a safety deposit box, or under the mattress, or even buried in the garden, rather than placing it in a bank account.”