Wholesale cash distribution in the future

Overview

Wholesale cash distribution is a key part of protecting public access to cash. It supplies banknotes and coin to bank branches, ATMs and retailers and ensures that cash deposits are processed and recirculated into the public domain. The wholesale cash system therefore plays an important role in enabling the public to use notes and coins as they choose. 

Although cash use is declining, many people still prefer cash. Our July 2022 survey found that around one in five respondents consider cash to be their preferred payment method, and so use it day to day. We are committed to supporting cash as a viable means of payment.

How does the UK cash cycle work?

The Bank of England and Note Circulation Scheme (NCS) members are responsible for the UK's wholesale cash distribution infrastructure.

• De La Rue, the Bank’s contracted printer, produces Bank of England banknotes.

• Bank of England cash centres store new notes, and process and destroy unfit returns.

• When required, notes are collected by a member of the (NCS) from a Bank of England cash centre.

• Notes are then held at NCS centres and withdrawn when needed to meet customer demand. NCS members supply operators of ATMs, Bank and Post Office branches, retailers and foreign exchange companies. In the UK, most cash enters circulation via ATMs.

• The public (the UK population, as well as international persons) use banknotes either to i) pay for goods and services, ii) deposit them into a financial institution or iii) retain them for an extended period as a store of value.

• Retailers and bank branches deposit cash takings by transporting their notes via a Cash in Transit provider to their NCS Member. NCS members reconcile and sort the notes, reissuing fit notes and returning old/unfit banknotes back to the Bank for destruction (to be replaced with new).

Note the Royal Mint, on behalf of HM Treasury, issues UK coin to the NCS members under separate arrangements. However, the Bank of England’s upcoming legislative powers (see below) will apply to both the wholesale distribution of banknotes and coin. 

Latest updates on our work to support wholesale cash distribution

• The Bank of England is preparing to exercise its new market and prudential oversight powers of the UK wholesale cash distribution market. On 24 April 2024, we published the Codes of Practice for market oversight, the supporting guidance and Wholesale cash distribution data catalogue. We also published Responses to the consultation on the codes of practice for wholesale cash distribution market oversight. The consultation ran from November 2023 until January 2024.
• On 28 March 2024, we published a consultation on the approach to enforcement which includes the statements of policy and procedures in respect of Wholesale Cash Distribution firms recognised by HM Treasury by order as having market significance.
• We are currently conducting a review of the Note Circulation Scheme (NCS) in consultation with its members and supporting financial institutions. This review aims to support industry efforts to promote effectiveness, resilience and sustainability.

Bank of England Codes of Practice for wholesale cash distribution market oversight

On 24 April 2024, the Bank published the Codes of Practice for market oversight. The codes of practice provide transparency on the minimum standards of conduct and practice that recognised firms must meet. The proposed codes of practice are outcomes-based and are intended to enable an effective, resilient, and sustainable wholesale cash infrastructure. To support recognised firms in meeting the requirements set out in the codes of practice, a data catalogue, reporting form, and guidance have also been published.

What work has been completed to date to support wholesale cash distribution?