MPs warned there was a risk of a ’two-tier society’ forming if cash acceptance is not monitored, adding that it may have to be mandated.
The public should be advised to keep cash on hand in case of cyber attacks or system outages, MPs have told the Treasury.
MPs continued, “This may include recommending that cash is held by individuals in case of emergency, and considering what role cash distribution might play in a severe payment systems outage.”
The committee cited the National Risk Register which notes that the UK’s financial systems are vulnerable to risks, specifically a “malicious cyberattack by a state actor” or “non-malicious technological failure.”
They concluded that owing to these risks and other potential failures in a retail bank’s digital supply chain, “physical cash has a vital role to play as a payment method that is independent, that is backed by the UK government, and that can be used as an analogue payment method when digital ones fail.”
National Resilience
The recommendations form part of a report into cash acceptance in the UK, amid recent trends showing a major decline in the use of physical currency.
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The committee also considered international examples where governments have assessed the role of cash.
MPs cited Sweden, which was explicitly planning to minimise physical cash and move towards a more cashless society. But the Scandinavian country reversed that decision, in part because of the importance of cash for civil resilience.
Farnell explained that cash can help sustain public confidence during the critical two- to five-day window following a disruption, such as a system outage.
“The ability to self-manage trade through formal or informal cash is vital for civil order,” he said.
A branch of Lloyds Bank in the City of London, England, on Oct. 20, 2014. Stefan Rousseau/PA Wire
Mandating Cash
The Treasury Committee also warned that there was a risk of a “two-tier society” forming if cash acceptance declines.
The committee said it spoke to several charities representing vulnerable groups—such as the elderly, those with learning disabilities, and survivors of economic abuse—who rely on cash and whose lives are impacted when cash is refused as a payment method.
Charities also told MPs that local government is increasingly becoming cashless, including at council-run car parks and leisure centres.
Witnesses had highlighted public transport is also a space where cash acceptance has become less common.
‘Sleepwalking’ Into a Cashless Society
Treasury Committee Chairwoman Dame Meg Hillier MP said that the government was “in the dark” on how widely cash is being accepted, with the committee calling for cash acceptance levels to be formally monitored.
“We are at risk of a two-tier society where the most vulnerable bear the brunt and this needs to be a wakeup call,” Hillier said.
She added: “As a society, we must avoid sleepwalking into a situation where cash is no longer widely accepted. This is the beginning, not the end, of our scrutiny of this issue. The Government needs to take this seriously.”
Responding to the report, a Treasury spokesperson said: “Cash continues to be used by millions of people across the UK and we are working with the banks to roll out 350 hubs by the end of this Parliament so that people and businesses in areas that have lost local bank branches still have access to it.
PA Media contributed to this report.