How do we know how much money to print?


    How do we know how much money to print?

    Every day bundles of fresh banknotes land on the conveyor belts in our printing facility in Essex. The new cash is bought by wholesale distributors who supply to commercial banks, which stock some of it in ATMs all across the country.

    Most of the money we print is to replace old, worn-out banknotes. But we also have to predict, or forecast, how much we think demand for cash will increase.


    When forecasting demand for banknotes we have to think about what drives it.

    Fundamental changes to society such as an increasing population, inflation and economic growth are important. We expect people to demand more banknotes over time because wages increase and things get more expensive.

    We also know people want more notes when the economy is doing well because they have more money to spend.

    However, over time, technological developments such as the introduction of contactless cards means that less of this money is spent via cash.

    When the pound drops in value, overseas demand for notes increases in part because overseas investors buy cash expecting to make a profit in the future. Tourists who need to exchange money ahead of their travels also tend to do so while it’s cheap. Overall, Britain becomes cheaper as a holiday destination and attracts more visitors when the pound goes down.

    When the interest rate goes up, fewer people keep cash at home because it’s more lucrative to deposit money in the bank.

    When we introduce a new series of notes we have to print many more new notes. In fact, we printed just over one billion notes ahead of the new £10 launch.

    When do people want cash?

    There are certain points in the year when you spend more. We print more cash to meet the extra demand at these times.

    Recognising patterns in the demand for cash allow us to forecast when to print more banknotes. A good example of this is Christmas.

    Whether you’re buying presents for family or train tickets home, it’s likely you spend more during the festive season (here shows how much more).

    Each year in the run-up to Christmas, demand for cash reaches a peak.

    Tis the season chart - KB guide with title-02

    But it’s not just at Christmas we see a pattern. Weekly, there is an increase in demand for cash, the closer we get to the weekend. People are more likely to withdraw cash on a Friday compared to a Monday, in preparation for the weekend.

    How has demand for cash changed over time?

    Over the past decades, demand for cash has been growing, with the value of banknotes in the economy more than doubling since 2005. Compared to other payment methods, cash is in decline, however. In 2006, more than 60% of all payments were made in cash. In 2016, this figure had dropped to 40%.

    Cash or card chart - KB guide with title-03

    This is the paradox of cash – demand is growing even as it’s less commonly used for payments.

    As we’ve seen, an increasing population, inflation and economic growth boosts cash demand, although these effects may be reducing over time due to alternative payments.

    We can’t trace cash and so it’s impossible for us to know exactly what drives growth, but it may be that:

    1. Cash is a useful budgeting tool. Cash (compared to other payment methods, such as contactless) is tangible, which makes it easier to keep track of how much you are spending.

    2. The demand for Sterling cash overseas is increasing.

    3. Some people don’t put their money in the bank. Low interest rates incentivise increased hoarding, so notes remain in people’s wallets and shop tills for longer.

    4. Some cash may be used in the shadow economy, where activity is unrecorded and may be illegal.

    5. People like having cash in case of an emergency or if their local ATM goes out of service.

    Because people value cash for all these reasons it’s important we provide good quality, difficult to counterfeit banknotes in the quantities demanded by the public.

    Find out more:


    1. Claudio Ricciato
      26th December 2017

      Very clear!

    2. Jon
      18th May 2018

      Cash is best. If I have I spend it if I don’t I don’t therefore I’m never in debt. Young people take note!

    3. Lance
      12th September 2018


    4. James Knight
      3rd December 2018

      Thanks! Very cool

    5. Nigel Faraj
      3rd December 2018

      very lovely information. I LOVE IT

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