Experts are mystified about the whereabouts of about £50bn worth of banknotes which is supposed to be circulating through the UK economy.

A report by the National Audit Office (NAO) has acknowledged that it knows next to nothing about the whereabouts of the cash, which is not being used for transactions or identified as savings held by UK households, reports the Mirror.

It has said that some of the missing money may have ended up being stashed overseas, stuffed under mattresses or stocked up for use in the 'shadow economy' - in off-the-books cash transactions.

But there is little reliable data to quantify how much is likely to be held where, the NAO said - and it is seeking a new system to map where the UK's physical money ends up.

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Five public bodies – the Treasury, the Bank of England, the Royal Mint, the Financial Conduct Authority (FCA) and the Payments Systems Regulator (PSR) – all play a role in administering or overseeing the nation's cash system.

There are a number of explanations as to where the money could be - including stuffed under mattresses

These bodies lack a shared view of what a good outcome for the consumer looks like and how the costs of achieving this are to be taken into account, the NAO’s report said.

There is no single body with responsibility for overseeing how well the cash system is performing.

Gareth Davies, the head of the National Audit Office, said: “As society progresses towards the wide use of digital payments, the use of cash in transactions is dwindling. It may become harder for people to access cash when they need it and those without the means to pay digitally will struggle if cash is not accepted.

"HM Treasury now works more closely with the public bodies in the cash system to achieve the Government’s goal of safeguarding access to cash. However, the approach is fragmented, and it is not clear that the action being taken will keep up with the pace of change.”

A decade ago, cash was used in six in 10 transactions, but by 2019 it was used in fewer than three in 10. Forecasts suggest it might be one in 10 by 2028.