Lowest demand for money since central banks hoarded notes over millennium bug fears

Demand for banknotes is at its lowest since central banks stockpiled money for worry of the millennium bug, the Bank of England’s sole forex printer mentioned.

The British banknote maker De La Rue has mentioned demand for notes is on the lowest ranges for greater than 20 years.

Demand dropped to a 20-year low, versus an all-time low, as a result of central banks hoarded notes for worry of the millennium bug in 2000, a De La Rue spokesperson mentioned.

This dampened demand within the years following the flip of the millennium.

In the run-up to 2000, there was widespread fear that the pc techniques underpinning the monetary and banking sector – in addition to trade total – wouldn’t settle for the double zero of dates after 31 December 1999 and would malfunction.

The present low demand can also be due to central banks stocking up on money, this time through the COVID-19 pandemic, the spokesperson mentioned.

During instances of uncertainty, comparable to a world pandemic, banks, ATM operators and publish places of work usually guarantee they’re totally stocked with banknotes. At the identical time, use of money dropped, as did some types of discretionary spending.

As a end result, De La Rue mentioned it has a low order e-book going into its 2024 monetary 12 months and the outlook has “a significant degree of uncertainty”.

The impacts are additionally being felt within the present 2023 monetary 12 months and on Wednesday morning the corporate mentioned it expects full-year adjusted working earnings to be a “mid-single digit percentage” – round 5% – which is beneath market expectations.

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De La Rue introduced it’s in discussions with its lenders looking for an modification to its banking covenants that displays the revised outlook and the rise within the firm’s funding prices on account of increased Bank of England rates of interest.

Wednesday’s buying and selling replace was simply the newest in a string of revenue warnings triggered by administration mishaps.

In March this 12 months, Sky News reported that De La Rue requested respiration house from its pension trustees by delaying practically £20m of retirement funding funds.

Late final 12 months De La Rue criticised its auditor, EY, for together with a going concern warning in its accounts.