It wasn’t long ago that people were debating whether or not the UK should scrap copper coins and £50 banknotes. Last week, however, the discussion changed, as the Bank of England announced that not only would they keep the small change and fifty-pound notes in circulation, they would also introduce a new polymer £50 note to match the new fives, tens and twenties.
Research suggests that there are still £330 million pounds worth of £50 notes in circulation, which are thought largely to be used for criminal activity. There is still a perception that high-value notes are associated with the black economy. For example, large cash denominations are used as a tender for illegal drugs, whose businesses solely run on cash, hence their use of higher value notes. Consequently, shop owners are reluctant to accept £50 notes, with concerns that a high percentage of them are fake and that by accepting them, their businesses would be running the risk of helping criminals launder their money.
It is such thinking that led to India’s president, Narandi Modi, giving only 4 hours’ notice before he effectively rendered useless 86% of all cash in India’s economy, through his demonetisation of 1000 and 500 rupee notes back in 2016. Whilst such an extreme policy caused chaos and a lot of collateral damage, many economists would agree that less abrupt methods of weeding out cash from the shadow economy would be beneficial.
The new polymer bank notes are much harder to counterfeit than their paper predecessors, which should counter the use of fake cash, but there is nothing to say that the new £50 note won’t continue to be associated with money laundering and the black economy.
So why has the Treasury not decided to scrap it altogether? Robert Jenrick, Exchequer Secretary to the Treasury is reported to have said, that “people should have as much choice [as possible] when it comes
to their money” which forms the basis for the argument of keeping the fifty-pound note alive. It is also likely that the Bank of England will be considering inflation, which is currently between 2% and 3%, meaning that prices are rising. This causes the demand for higher denominations to increase, as consumers will be able to purchase relatively less with £5 and £10 notes.
What is perhaps most baffling, is that the Bank of England has asked for suggestions from the public as to who should feature on the new note. The last time such powers were given to the general public, in a poll to name Britain’s new research vessel, the nation overwhelmingly settled on the name Boaty McBoatface. It’s, therefore, unsurprising that one of the suggestions with the most momentum depicts England centre-back Harry Maguire riding a unicorn. Other frontrunners include Alan Turing, Clement Atlee, Mary Seacole and the somewhat controversial possibility of Margaret Thatcher.
But whoever receives the honour, no pretty face will change the fact that the £50 note has an untrustworthy reputation that won’t disappear overnight. Only time will tell whether the new fifty will become normalised within society, or whether it will hold on to its shady connotations.