The pound is the official currency of the United Kingdom, the Crown dependencies of Britain and three British Overseas Territories. In these areas, seven retail banks have the right to print their own banknotes in addition to the Bank of England and the dependency and territorial governments. Unlike most other countries, banknote issue in Britain is not automatically tied in with one national identity or the activity of the state.
However, some of the monopoly provisions of the Bank Charter Act only applied to England and Wales. The Bank Notes (Scotland) Act was passed the following year, and to this day, three retail banks retain the right to issue their own sterling banknotes in Scotland, and four in Northern Ireland. Notes issued in excess of the value of notes outstanding in 1844 (1845 in Scotland) must be backed up by an equivalent value of Bank of England notes.
Following the Partition of Ireland, the Irish Free State created an Irish pound in 1928; the new currency was pegged to sterling until 1979. The issue of banknotes for the Irish pound fell under the authority of the Currency Commission of Ireland, who immediately abandoned the sterling banknotes in favour of a single Consolidated Banknote Issue in 1928. Meanwhile, Irish banks continued to issue sterling banknotes. From 1929, these were specifically for circulation in Northern Ireland.
|1694||Bank of England Act 1694||England & Wales||Incorporation of the Bank of England|
|1695||An Act creating the Governor and Company of the Bank of Scotland||Scotland||Creation of the Bank of Scotland, principally as a trading bank|
|1707||Acts of Union 1707||
England & Wales|
|English and Scottish parliaments merged into the Parliament of Great Britain|
|1708 1709||Bank of England Act 1708|
Bank of England Act 1709
|England & Wales||Prohibition of companies or partnerships of more than six people to set up banks and issue notes, preventing smaller banks from printing their own money|
|1727||Chartering of the Royal Bank of Scotland||Scotland||Broke the monopoly of the Bank of Scotland, initiated the banking war when the Royal Bank attempted to drive the Bank of Scotland out of business by stockpiling and then presenting its notes for payment.|
|1800||Act of Union 1800||Great Britain & Ireland||British and Irish parliaments merged into the Parliament of Great Britain and Ireland|
|1826||Country Bankers Act 1826||England & Wales||Allowed joint stock banks with more than six partners which were at least 65 miles away from London to print their own money. Bank of England allowed to open branches in major English provincial cities, enabling wider distribution of its notes.|
Bank Notes Act 1826|
Bankers (Scotland) Act 1826
|England & Wales|
|Prohibition of circulation of notes under £5 in England. Attempts to apply this law in Scotland fail after a protest by Sir Walter Scott, and the Scottish £1 note is saved.|
|1833||Bank Notes Act 1833||England & Wales||Gave Bank of England notes official status as "legal tender" for all sums above £5 in England and Wales to guarantee public confidence in the notes even in the event of a gold shortage.|
|1844||Bank Charter Act 1844||UK||Took away the note-issuing rights of any new banks; existing note-issuing banks barred from expanding their issue. Began process of giving Bank of England monopoly over banknote issue in England and Wales.|
|1845||Bank Notes (Scotland) Act 1845||Scotland||Regulated issue of notes in Scotland; most Scottish banknotes had to be backed up by Bank of England money|
|1908||Bank closure||Wales||The last private note issuer in Wales, the North and South Wales Bank, loses its note-issuing rights under the 1844 act after it is acquired by Midland Bank.|
|1914||Currency and Bank Notes Act 1914||UK||HM Treasury given temporary wartime powers for issuing banknotes to the value of £1 and 10/- (ten shillings) in the UK (ended 1928)|
|1921||Bank closure||England||The last private note issuer in England, Fox, Fowler and Company of Somerset, loses its note-issuing rights under the 1844 act after it is acquired by Lloyds Bank.|
|1928||Irish pound established||Ireland||Following Partition of Ireland, Irish pound is established as a separate currency (but at parity with sterling until 1979); Northern Ireland remains within sterling|
|1954||Currency and Bank Notes Act 1954||UK||Extended the Bank Notes Act 1833 to make Bank of England notes under £5 in value legal tender; act also applied to Scotland, making English 10/- and £1 legal tender for the first time. Bank of England withdrew low-denomination notes in 1969 and 1988, removing legal tender from Scotland.|
The following table lays out the various banks or authorities which are authorised to print pound sterling banknotes, organised by territory:
|England & Wales||Scotland||Northern Ireland|
|The Isle of Man||Bailiwick of Jersey||Bailiwick of Guernsey|
|British Overseas Territories|
|Gibraltar||Saint Helena||Falkland Islands|
|= notes issued by a government or treasury|
|= notes issued by a central bank|
|= notes issued by a retail bank|
Banknotes do not have to be classed as legal tender to be acceptable for trade; millions of retail transactions are carried out in the UK using cheques, or debit or credit cards, none of which is a payment using legal tender. Acceptability as a means of payment is essentially a matter for agreement between the parties involved.
Millions of pounds' worth of sterling banknotes in circulation are not legal tender, but that does not mean that they are illegal or of lesser value; their status is of "legal currency" (that is to say that their issue is approved by the parliament of the UK) and they are backed up by Bank of England securities.
Bank of England notes are the only banknotes that are legal tender in England and Wales. Scottish, Northern Ireland, Jersey, Guernsey and Manx banknotes are not legal tender in England and Wales. However, they are not illegal under English law and creditors and traders may accept them if they so choose.
In Scotland and Northern Ireland no banknotes, not even ones issued in those countries, are legal tender. Scottish and Northern Irish notes are 'promissory notes' (defined as legal currency), essentially cheques made out from the bank to 'the bearer', as the wording on each note says. They have a similar legal standing to cheques or debit cards, in that their acceptability as a means of payment is essentially a matter for agreement between the parties involved, although Scots law requires any reasonable offer for settlement of a debt to be accepted.
Bank of England one pound notes did have legal tender status in Scotland while they existed. The Currency and Bank Notes Act 1954 defined Bank of England notes of less than £5 in value as legal tender in Scotland. Since the English £1 note was removed from circulation in 1988, this leaves a legal curiosity in Scots law whereby there is no paper legal tender in Scotland. The UK Treasury has proposed extending legal tender status to Scottish banknotes. The proposal has been opposed by Scottish nationalists who claim it would reduce the independence of the Scottish banking sector.
Most of the notes issued by the note-issuing banks in Scotland and Northern Ireland have to be backed by Bank of England notes held by the issuing bank. The combined size of these banknote issues is well over a billion pounds. To make it possible for the note-issuing banks to hold equivalent values in Bank of England notes, the Bank of England issues special notes with denominations of one million pounds ("Giants") and one hundred million pounds ("Titans") for internal use by the other banks.
Bank notes are no longer redeemable in gold and the Bank of England will only redeem sterling banknotes for more sterling banknotes or coins. The contemporary sterling is a fiat currency which is backed only by securities; in essence IOUs from the Treasury that represent future income from the taxation of the population. Some economists term this 'currency by trust' as sterling relies on the faith of the user rather than any physical specie.
In 1921 the Bank of England gained a legal monopoly on the issue of banknotes in England and Wales, a process that started with the Bank Charter Act of 1844 when the ability of other banks to issues notes was restricted.
The bank issued its first banknotes in 1694, although before 1745 they were written for irregular amounts, rather than predefined multiples of a pound. It tended to be times of war, which put inflationary pressure on the British economy, that led to greater note issue. In 1759, during the Seven Years' War, when the lowest-value note issued by the Bank was £20, a £10 note was issued for the first time. In 1793, during the war with revolutionary France, the Bank issued the first £5 note. Four years later, £1 and £2 notes appeared, although not on a permanent basis. Notes did not become entirely machine-printed and payable to the bearer until 1855.
At the start of the First World War, the government issued £1 and 10-shilling Treasury notes to supplant the sovereign and half-sovereign gold coins. The first coloured banknotes were issued in 1928, and were also the first notes to be printed on both sides. The Second World War saw a reversal in the trend of warfare creating more notes when, in order to combat forgery, higher denomination notes (at the time as high as £1,000) were removed from circulation.
As of 13 March 2007 the Bank of England banknotes in circulation, known as Series E, do not exceed £50. The notes are as follows:
On 13 March 2007, the first note from the new Series F entered circulation. This is the new 20 pound note depicting Adam Smith, with an illustration of 'The division of labour in pin manufacturing', which will replace the Series E Elgar note.
As of 2005, they are signed by the Chief Cashier, Andrew Bailey.
All the notes issued since Series C in 1960 also depict Elizabeth II of the United Kingdom in full view facing left and as a watermark, hidden, facing right; recent issues have the EURion constellation around. The custom of depicting historical figures on the reverse began with William Shakespeare in Series D in 1970.
|£1||Isaac Newton||9 February 1978||11 March 1988|
|£5||Duke of Wellington||11 November 1971||29 November 1991|
|£10||Florence Nightingale||20 February 1975||20 May 1994|
|£20||William Shakespeare||9 July 1970||19 March 1993|
|£50||Christopher Wren||20 March 1981||20 September 1996|
|£5||George Stephenson||7 June 1990||21 November 2003|
|£10||Charles Dickens||29 April 1992||31 July 2003|
|£20||Michael Faraday||5 June 1991||28 February 2001|
|£50||John Houblon||20 April 1994||in use|
|Series E revision|
|£5||Elizabeth Fry||21 May 2002||in use|
|£10||Charles Darwin||7 November 2000||in use|
|£20||Edward Elgar||22 June 1999||in use|
|£20||Adam Smith||13 March 2007||in use|
The Bank of England Series D one pound note was discontinued in 1984, having been replaced by a pound coin the year before, and was officially withdrawn from circulation in 1988. Nonetheless, all banknotes, regardless of when they were withdrawn from circulation may be presented at the Bank of England where they will be exchanged for current banknotes. Other banks may also decide to exchange old banknotes but they are not under an obligation to do so.
Higher-value notes are used within the banks – particularly the £1 million and £100 million notes used to maintain parity with Scottish and Northern Irish notes. Banknotes issued by Scottish and Northern Irish banks have to be backed by Bank of England notes (other than a small amount representing the currency in circulation in 1845), and special million pound notes are used for this purpose. These resemble simple IOUs and bear no aesthetic design features.
Scottish and Northern Irish banknotes are unusual, firstly because they are issued by retail banks, not central banks, and secondly, as they are not legal tender anywhere in the UK – not even in Scotland or Northern Ireland – they are in fact promissory notes. Indeed, no banknotes (even Bank of England notes) are now legal tender there.
Seven retail banks have the authority of Parliament to issue sterling banknotes as currency. Despite this, the notes are sometimes refused in England and Wales, and are not always accepted by banks and exchange bureaus outside of the United Kingdom. This is particularly true in the case of the Royal Bank of Scotland £1 note, which is the only £1 note to remain in circulation within the UK.
As of late 2007, the Tercentenary Series, introduced at the time of the Bank of Scotland's 300th anniversary in 1995, remains in circulation, but will be withdrawn as their physical condition deteriorates and will be replaced by the new Bridges of Scotland series:
All the notes also depict Sir Walter Scott who was instrumental in retaining the right of Scottish banks to issue their own notes in 1826.
Again all the notes also depict Sir Walter Scott on the front.
Following the announcement that HBOS (Bank of Scotland's parent company) would be taken over by Lloyds TSB in September 2008, it was confirmed that the new banking company would continue to print bank notes under the Bank of Scotland name. According to the 1845 Bank Notes (Scotland) Act, the bank could have lost its note-issuing rights, but by retaining headquarters within Scotland, banknote issue will continue.
In circulation are:
Occasionally the Royal Bank of Scotland issues commemorative banknotes. Examples include the £1 note issued to mark the 150th Anniversary of the birth of Alexander Graham Bell in 1997, the £20 note for the 100th birthday of Queen Elizabeth, the Queen Mother in 2000, and the £5 note honouring veteran golfer Jack Nicklaus in his last competitive Open Championship at St Andrews in 2005. These notes are much sought-after by collectors and they rarely remain long in circulation.
Currently, four Northern Irish banks practise their right to issue pound sterling notes in Northern Ireland, with different series of denominations. Bank of Ireland issues notes from £5 to £50. First Trust Bank issues notes from £10 to £100, Northern Bank issues notes from £5 to £100, and Ulster Bank issues notes from £5 to £50.
Northern Bank and Ulster Bank are the only two banks that have issued commemorative notes so far. The only polymer banknote in the UK was issued by Northern Bank commemorating the new millennium. It is the only one of the bank's pre-2004 notes still in circulation after the recall of all others following the £26.5 million pound robbery at its Belfast headquarters in 2004.
The Guernsey Pound is legal tender only in Guernsey, but also circulates freely in Jersey. Elsewhere it can be exchanged in banks and bureaux de change. In addition to coins, the following banknotes are used:
The Isle of Man Government issues its own banknotes and coinage, which are legal tender only on the Isle of Man. Manx pounds are a local issue of the pound sterling.
The front of all Manx banknotes feature images of Queen Elizabeth II (not wearing a crown) and the Triskeles (three legs emblem). Each denomination features a different scene of the Island on its reverse side:
The monarch is depicted on banknotes issued by the Crown dependencies.
Some British overseas territories have their own Sterling-based currencies, and some of these issue banknotes bearing the monarch; for example the Falkland pound, the Gibraltar pound, and the Saint Helena pound.