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I recently acquired a new Scottish £10 note. As I had not seen one before, had a close look at it and compared it to the new English tenner.
Now, the new English tenner has a picture of Liz and her/the Bank of England's promise to pay the bearer of said plastic note Ten Pounds. Has the BoE's head cashier's autograph too. But the Scottish bit of plastic (issued by the Clydesdale Bank) has no picture of Liz anywhere and the promise to pay the bearer is from the Clydesdale Bank plc.
This made me start pondering ....
Now thinking back a short while when the unsinkable big banks nearly went bust, is this promise from a PLC worth the plastic it is written on?
Can I set myself up as a Scottish bank and print money? (That van dealer from the North West set up his own bank a few years back so can be done.)
If those north of the border wish to go it on their own, does this mean that they now have their own money? Has little Jimmie Crankie set this up on the sly?
Is there not a Bank of Scotland? And if there is, why don't there guarantee their bits of plastic?
Now, the new English tenner has a picture of Liz and her/the Bank of England's promise to pay the bearer of said plastic note Ten Pounds. Has the BoE's head cashier's autograph too. But the Scottish bit of plastic (issued by the Clydesdale Bank) has no picture of Liz anywhere and the promise to pay the bearer is from the Clydesdale Bank plc.
This made me start pondering ....
Now thinking back a short while when the unsinkable big banks nearly went bust, is this promise from a PLC worth the plastic it is written on?
Can I set myself up as a Scottish bank and print money? (That van dealer from the North West set up his own bank a few years back so can be done.)
If those north of the border wish to go it on their own, does this mean that they now have their own money? Has little Jimmie Crankie set this up on the sly?
Is there not a Bank of Scotland? And if there is, why don't there guarantee their bits of plastic?
Wikipedia has a section on it.
Quote:Wiki
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][70]
Seven retail banks have the authority of HM Treasury to issue sterling banknotes as currency.[71][72] Despite this, the notes can be refused at the discretion of recipients in England and Wales, 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.[73]
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.[74] 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
So my foreign bit of plastic is actually worth something? Robert Burns, Edinburgh and all.
Quote:Yorkie
Now thinking back a short while when the unsinkable big banks nearly went bust, is this promise from a PLC worth the plastic it is written on?
It's worth exactly the same as the promise from the Bank of England. Have you ever actually tried taking a tenner to the head cashier of the B.o.E. and asking him for £10?
Quote:Yorkie
Can I set myself up as a Scottish bank and print money?
You could print Monopoly money if you wanted to but if you wanted to print Sterling notes (and not attract the attention of PC McPlod) you would need to be authorised to do so by Her Majesty's Government.
Quote:Yorkie
If those north of the border wish to go it on their own, does this mean that they now have their own money? Has little Jimmie Crankie set this up on the sly?
Nope, at least not money that would be recognised internationally as the equivalent of Sterling. Scottish bank notes only have value because the Scottish banks are authorised by Her Majesty's Government to print them. In the unlikely event of Scottish independence then they could create their own currency (and I suppose even call it Sterling if they wished) but without the backing of the Bank of England it's pretty unlikely that anyone outside of Scotland would touch it with a 20ft caber. The SNP's original plan for independence was to join the Euro, but then the likes of Greece made the Euro toxic (plus the EU made it pretty clear that an independent Scotland would not automatically be a member and would have to apply to join - a process which can take decades). So, the SNP unilaterally decided that it would stick with Sterling, to which H.M.G.'s response was "Erm, don't think so! You don't get to play fast and loose with our currency without us running your economy!"
Quote:Yorkie
Is there not a Bank of Scotland? And if there is, why don't there guarantee their bits of plastic?
The central bank for Scotland (and all of the UK) is the Bank of England. The Bank of Scotland is just another commercial bank.
Bit misleading above from Wikipedia (surprise surprise).
Here's the actual position from the Bank of England:
The term legal tender does not in itself govern the acceptability of banknotes in transactions. Whether or not notes have legal tender status, their acceptability as a means of payment is essentially a matter for agreement between the parties involved. Legal tender has a very narrow technical meaning in relation to the settlement of debt. If a debtor pays in legal tender the exact amount he owes under the terms of a contract, he has good defence in law if he is subsequently sued for non-payment of the debt. In ordinary everyday transactions, the term ‘legal tender’ has very little practical application.
So unless you are attempting to pay off a debt, it makes no difference what kind of bank note you tender at your corner shop in Leicester. If the shopkeeper doesn't fancy it he can refuse it, English or Scottish. My other half used to work in a shop where they were under instructions to refuse all £50 notes because so many of them were fake.
What gives your £10 note value (English or Scottish) is that anyone you tender it to (or you) can take it to their bank, deposit it in return for a £10 credit to their account, or exchange it for a couple of fivers or 100 £1 coins or whatever. The bank will not care whether it is an English or Scottish note. Problems only arise when you tender a Scottish note to a retailer who does not understand this, but they are not legally obliged to accept it any more than they are obliged to accept an English tenner.
Edited 1 time(s). Last edit at 18/10/2017 12:29 by Pimpernel44.
Hence the fact that the banks will still exchange the old 'round pound' - as will most large retailers.
Of course and independent Scotland can continue to use Sterling - in the same way as many countries do as much if not more of their commercial activity in £S and more often $US.
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Of course and independent Scotland can continue to use Sterling - in the same way as many countries do as much if not more of their commercial activity in £S and more often $US.
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Quote:Rich W
Of course and independent Scotland can continue to use Sterling - in the same way as many countries do as much if not more of their commercial activity in £S and more often $US.
Well sort of, but they couldn't print their own notes, call them Sterling, and expect them to be accepted as Sterling. It would need to be real Sterling, as issued by the Bank of England.
To do this would leave them at the mercy of the monetary and fiscal policies of the Bank of England, but where those policies have no regard for Scotland's needs and where Scotland has no control over them. It would be a pretty feeble kind of independence.
There are plenty of relatively impoverished countries which are very happy to extensively utilise a foreign currency (mostly $US) but I can't think that's how Scotland would see itself after independence!
Edited 1 time(s). Last edit at 18/10/2017 12:57 by Pimpernel44.
I'm saying nothing about how Scotland would be after Independence...honest guv...
Though as you say - they could maybe call their new currency whatever they like - Galactic Credit Standard* if they so chose - or Sterling* - or Jockies*. The only thing that really matters about currency is that people have confidence to use it as a means of exchange for goods and services.
Over and above that what would matter for an independent Scotland is whether their economy was sufficiently healthy and active in trading terms to substantiate the value of that currency relative to those of all its many competitors. I suppose that would depend on their economy being as healthy as other 1st World economies of a similar size - Norway for example, or New Zealand.
Like most of these things the proof is entirely in the eating - so the question is - do they want to roll those dice?
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Though as you say - they could maybe call their new currency whatever they like - Galactic Credit Standard* if they so chose - or Sterling* - or Jockies*. The only thing that really matters about currency is that people have confidence to use it as a means of exchange for goods and services.
Over and above that what would matter for an independent Scotland is whether their economy was sufficiently healthy and active in trading terms to substantiate the value of that currency relative to those of all its many competitors. I suppose that would depend on their economy being as healthy as other 1st World economies of a similar size - Norway for example, or New Zealand.
Like most of these things the proof is entirely in the eating - so the question is - do they want to roll those dice?
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But why is the Queen not on this Sterling note if backed by the Bank of England and why no promise from them to pay me the value rather than one from a plc employee?
Wouldn't that be the difference between 'backed' by and 'issued' by?
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All money is only of value if two sides of an exchange agree.Anything can be money if that's the case.
[www.youtube.com]
[www.youtube.com]
Arrhhh.
So we're going back to basics.
Once upon a time, many sleeps ago, stuff was bartered such that Adam changed his apple for something else which Sid then exchanged for something he wanted like an iPhone.
Money was introduced so that the Apple could be eaten before it went bad after thirty or forty barters allowing Adam to sell his apple for cash and then buy what he wanted, cutting out all the middlemen. To give said cash credibility, the monarch backed it with their gold.
So, has this Jock plc got any gold to support all the plastic they've printed?
So we're going back to basics.
Once upon a time, many sleeps ago, stuff was bartered such that Adam changed his apple for something else which Sid then exchanged for something he wanted like an iPhone.
Money was introduced so that the Apple could be eaten before it went bad after thirty or forty barters allowing Adam to sell his apple for cash and then buy what he wanted, cutting out all the middlemen. To give said cash credibility, the monarch backed it with their gold.
So, has this Jock plc got any gold to support all the plastic they've printed?
The BoE hasn't backed the currency with gold for generations.
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That might be so (and even more so since the Jock sold the rest of the country's gold off cheap) but trust takes over from that there shiny stuff. Now, do you "trust" mouthy Jimmie Crankie?
Quote:Rich W
More than Treseme...
Isn't that what you use to wash your 'air?
Quote:Yorkie
So, has this Jock plc got any gold to support all the plastic they've printed?
Yes and no.
The 7 authorised banks must comply with General and Specific Conditions which set out the standards required for holding backing assets and unissued ‘Excluded’ banknotes. As the Conditions include sensitive material such as the security standards that sites holding backing assets must meet, they are not published.
They have to hold certain volumes of backing assets, but those backing assets do not need to be gold and do not need to be equal to the value of issued currency in circulation.
Authorised banks may use a combination of Bank of England banknotes, UK coin and funds in an interest bearing bank account at the Bank of England as backing assets
That last bit I didn't know - or if I did I've forgotten.
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Maybe the Scottish banks hold bitcoin, they are supposed to be worth huge amounts according to the emails I keep getting.
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