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| Version 1 | Version 2 |
|---|---|
| Bank acts on £5 note distribution | Bank acts on £5 note distribution |
| (about 2 hours later) | |
| The Bank of England is to look at how it can encourage banks to issue more £5 notes, the number of which has fallen compared with other denominations. | The Bank of England is to look at how it can encourage banks to issue more £5 notes, the number of which has fallen compared with other denominations. |
| Bank governor Mervyn King said it had £1bn worth of £5 notes in its vault but high street banks did not want them. | Bank governor Mervyn King said it had £1bn worth of £5 notes in its vault but high street banks did not want them. |
| They found it cheaper to issue £10 and £20 notes and the shortage of "fivers" in circulation led to their "noticeably soiled and scruffy" condition, he said. | They found it cheaper to issue £10 and £20 notes and the shortage of "fivers" in circulation led to their "noticeably soiled and scruffy" condition, he said. |
| He said the Bank would look at offering incentives for banks to stock more. | He said the Bank would look at offering incentives for banks to stock more. |
| He noted that the circulation of the £5 note had not increased in 15 years and that over that period the average time they remain in the banking system has doubled. | |
| "The problem is not at the production end - we have an ample supply of new £5 notes waiting to be used," he said during a speech to financiers at London's Mansion House. | "The problem is not at the production end - we have an ample supply of new £5 notes waiting to be used," he said during a speech to financiers at London's Mansion House. |
| "There is a need for an adequate supply of low denomination notes that can be used for small transactions," he added, but accepted that the public convenience may not "correspond to the private interests of commercial banks". | "There is a need for an adequate supply of low denomination notes that can be used for small transactions," he added, but accepted that the public convenience may not "correspond to the private interests of commercial banks". |
| 'Remarkable decade' | |
| Mr King also praised Chancellor Gordon Brown for his contribution to a "remarkable decade for the British economy". | |
| He called Mr Brown's decision to grant independence to the Bank of England 10 years ago as a "fundamental improvement" to the conduct of economic policy in the UK. | |
| Be cautious about how much you borrow Mervyn King, Bank of England Governor | |
| But Mr King suggested the chancellor had failed to adequately address the imbalance between responsibilities and powers in the oversight of payment and settlement systems - crucial to maintaining financial stability. | |
| The promise of more specific regulation comes as the development of complex financial instruments and the spate of loan arrangements from institutional lenders without traditional covenants has hugely increased credit risk. | |
| "Be cautious about how much you borrow," Mr King warned, particularly in cases where one lender knows little of the activities of the borrower. | |
| "It may say champagne - AAA- on the label of an increasing number of structured credit instruments. | |
| "But by the time investors get to what's left in the bottle, it could taste rather flat." |