See Wikipedia on this. Actually, as it is, Scottish notes are not legal tender i.e. merchants, banks & individuals can refuse them and demand the equivalent in Bank of England notes. This most likely enrages Scots, but they dont connect the dots and get that the private bank that issues the notes isnt official, and is backing these sort-of Pounds with guaranteed English pounds sterling under rules determined...you guessed it, in London. Banknotes of the Pound -- Wikipedia.en [ * * * ] Scotland and Northern Ireland While provincial banks in England and Wales lost the right to issue paper currency altogether, the practice of private banknote issue has continued in Scotland and Northern Ireland. The right of Scottish banks to issue notes is popularly attributed to the author Sir Walter Scott...[.] [ Read next Para. here to understand it fully ] Scottish and Northern Irish banknotes are unusual, firstly because they are issued by retail banks, not central banks, and secondly, as they are technically [NOT] legal tender anywhere in the UK – not even in Scotland or Northern Ireland – they are in fact promissory notes.[17][46] Seven retail banks have the authority of HM Treasury to issue sterling banknotes as currency.[47] Despite this, [THE NOTES CAN BE REFUSED AT THE DISCRETION OF THE RECIPIENTS IN ENGLAND AND WALES] [my emphasis], and are often not 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.[48] In 2000, the European Central Bank indicated that, should the United Kingdom join the Euro, Scottish banks (and, by extension, Northern Irish banks) would have to cease banknote issue.[49] During the Financial crisis of 2007–2008, the future of private banknotes in the United Kingdom was uncertain. After the financial crisis of 2007–08, a number of banks were rescued from collapse by the United Kingdom government. The Banking Act 2009 was passed to improve protection for holders of banknotes issued by the authorised banks, so that the notes would have the same level of guaranteed value to that of Bank of England notes.[50][51] Critics of the 2009 Act expressed concerns that it would restrict the issue of banknotes by commercial banks in Scotland and Northern Ireland by removing many of the provisions of the earlier Acts quoted above.[52] Under the original proposals, banks would have been forced to lodge sterling funds with the Bank of England to cover private note issue for a full week, rather than over a weekend, thereby losing four days interest and making banknote production financially unviable. Following negotiations among the UK Treasury, the Bank of England and the Scottish banks, it was agreed that the funds would earn interest, allowing them to continue to issue their own notes.[53] During the public debate leading up to the 2014 Scottish independence referendum, the question of Scotlands future currency was discussed. While the SNP have advocated a currency union between an independent Scotland and the remnant of the United Kingdom,[54] HM Treasury issued a statement in April 2013 stating that the present relationship with the Bank of England could be changed after independence, with the result that Scottish banks may lose the ability to issue banknotes backed by Bank of England funds.[55][56][57]
Posted on: Wed, 17 Sep 2014 23:48:34 +0000