MacroSnaps11 September 2026
No. 62About 97% of the money in Britain is not cash. Banks created it by typing numbers when they made loans.
Notes and coins2.8%(2025)Numbers in bank accounts97.2%(2025)
The Bank of England's broad money measure (M4), split between physical notes and coin and money held as bank deposits. About £87bn of cash against roughly £3.1 trillion of deposits. The bands always sum to 100%.
Why this is happening
- This is the part most people have backwards. A bank does not lend out money that savers deposited: when it approves a mortgage it simply writes the amount into the borrower's account, and that new deposit is new money. The Bank of England says so in plain words in its own 2014 bulletin.
- The money is destroyed again when the loan is repaid, so the size of the money supply is mostly the outcome of how much banks are lending, not how much cash the state has printed.
- What limits it is not a vault of cash but profitability and regulation: capital requirements, the interest rate the central bank sets, and whether the bank thinks it will be paid back.
The take
If almost all money is bank credit, then two things follow. A banking crisis is not just lost savings, it is the money supply itself shrinking, which is why governments always rescue banks whatever they say beforehand. And it explains the fight over digital currencies: a central bank digital pound would be the first state-issued money most people could hold since cash, and the banks understand exactly what that would do to their deposits.
Source: Bank of England (2025)