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Home > Banknotes > Destruction
 

Destruction

​Every year, around 700 million notes are withdrawn from circulation because they are too old, worn or dirty to be recirculated. These notes are deemed unfit. It is the responsibility of NCS members to sort notes returned from retailers and financial institutions in order to identify unfit notes. The NCS members return unfit notes to the Bank where they are destroyed.

Distribution - the Note Circulation Scheme

The Bank issues new notes to replace unfit notes. We therefore need to ensure that NCS members are returning only unfit notes, as replacing fit notes would be an unnecessary cost to the public purse. NCS members buy new notes from the Bank at face value and the Bank reimburses at face value the value of unfit notes that are returned.  We check that NCS members are returning the correct number of notes, and applying the correct fitness standard, by taking a random sample from each NCS member’s returned notes every month. We do not pay NCS members for missing notes or incorrect items (e.g. Scottish or Northern Ireland notes). NCS members are also charged if they return notes that are fit enough to be recirculated. These charges help ensure that the taxpayer does not lose out as a result of errors made by the commercial sector.
 
All of the notes returned to the Bank are destroyed.  Until 1990, notes were incinerated and the energy generated helped to heat the Bank. Following an upgrade to our equipment in the early 1990s, the Bank moved away from this method, initially with the notes being taken off site and incinerated for energy recovery and then, in the early 2000s, we started to recycle using a composting treatment (as used in the treatment of food waste).  From 2011, the majority of the Bank’s paper note waste has been recycled in this way and used as a soil improver for agriculture although we are now exploring other options given changes in the industry.
 
With the introduction of polymer, the Bank of England has committed to recycling polymer notes when they come out of circulation, and will fully segregate paper and polymer banknotes.  As composting is not suitable for polymer notes, the Bank commissioned an independent third party to conduct a Life Cycle Assessment study to assess the environmental impacts of different waste treatment options. The study was conducted using the international standards ISO 14040:2006 and 14044:2006 for Life Cycle Assessment, and externally reviewed by a panel of industry experts. Recycling proved to be the most favourable option as it comes with the lowest impacts for all the environmental impact indicators considered (see full report).  As a result the Bank has secured a UK based recycling solution, for polymer notes to be turned into pellets before being transformed into new plastic items such as plant pots. 
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