Demand for bank notes very low

British banknote maker De La Rue has said that global demand for banknotes has hit a 20-year low. The company designs a third of banknotes worldwide and has experienced falling demand for cash since the pandemic hit. Central banks initially stocked up on currency during the Covid-19 crisis, but now seem to be delaying new orders as they use up their existing stock. As a result, De La Rue has had to renegotiate its loan agreements with its banks due to the tough trading conditions.

CEO Clive Vacher commented that central banks typically increase their orders for banknotes during economic crises due to the security of having cash on hand. However, he added that there is now a downturn, which may last 9-12 months longer than usual, as banks run through their stock. This trend is occurring as consumer use of cash declines in many countries, with more transactions being made online or with cards, particularly via contactless payments.

De La Rue said there are signs of recovery but it is unclear when it will happen. The firm’s shares fell by as much as 30% on Wednesday after the company published its trading update. The 200-year-old company is currently in talks with its banks to amend its loan agreements due to lower profits and higher interest rates following several increases by the Bank of England.

The banknote maker now expects its full-year profit to be in the “low £20m range,” while the interest costs on its loans have risen. It said it is “in discussions with its lending banks in relation to seeking an amendment to its banking covenants, reflecting the revised outlook and also reflecting the increase in the company’s funding costs resulting from higher Bank of England base rates”. De La Rue employs 1,800 people worldwide and works with 140 countries. All current Bank of England banknotes are printed by the firm at a site in Debden, Essex.