One thing you might expect in the midst of a bank confidence crisis (aside from a spike in mattress sales) is a spike in currency demand. Yeah, the UK's got that, but really, it is not about confidence. Promise.
Mr Bailey, who is also executive director for banking services at the Bank, said that low interest rates were another possible explanation.
The total value of £50 notes in circulation has risen to £9bn from £7bn since the summer of 2007, he said in a speech yesterday. He said that circulation picked up from the onset of the financial crisis, and rose more sharply still from last autumn, in the wake of the collapse of Lehman Brothers.
"Two features of the current situation strike me as most relevant in explaining this development: first, lower levels of public confidence in the banking system and second, low interest rates," he said.
We fail to see the import of the precise cause of cash hoarding. Dismal interest rates or bank panic, the result is the same. Less cash on hand for banks to chalk up in the asset column. Attenuated bank profits around the corner. A bigger bite for inflation if (when?) it shows its face. Nothing to see here.