Money, Money, Money…

The pound sterling is used in Northern Ireland with individual notes available from all the major banks acceptable. This can be confusing for the visitor as not only will you find English notes in circulation but also Sterling Bank of Ireland, First Trust Bank, Northern Bank and Ulster Bank and Scottish Bank notes along with occasional Bank of Isle of Man all of which are accepted in general exchange. This can mean up to half a dozen different notes of the same denomination. The picture below gives you a clue of what to expect. All the notes shown are £10 Sterling.

Northern Ireland has had its own distinctive banknotes under provisions of the Banknotes (Scotland and Ireland) Acts of 1845. Following partition a special Act of parliament – the Bankers (Northern Ireland) Act 1928 – was passed to allow trading in sterling but using notes designed for Northern Ireland. Since then famous faces and places from the province have adorned the banknotes. Traders in Great Britain often turn the notes down; they do not have to take them as they are not legal tender over there. This is something seldom mentioned or recognised here in Northern Ireland.

I read somewhere a couple of months ago that some £1,607 million of locally-issued banknotes were in circulation on 24th November 2007! To avail of this privilege, an issuing bank must lodge enough money with the Bank of England to cover the value of its banknotes, but only from Friday to Monday. On the other four days of the week these funds, known as note-covering assets, can be invested elsewhere. Investing the money raises around £45 million a year for the four banks together.

At the end of January this year The Treasurer decided that this gave the banks involved an unfair advantage over other institutions, as well as cutting into revenues. The Treasury proposes a Bill to oblige all eight of the Scottish and Northern Irish banks to back their own notes with Bank of England notes at all times. That would also hand supervision of the arrangements to the Bank of England, rather than the Revenue Commissioners who now police them.

If this happened, the banks would not be able to invest their note-covering assets during the week. The result will be poorer service for their customers. It will, for example, take away the banks’ current incentive to offer ATM withdrawals of their own notes free of transaction charges (fees are currently zero because the banks want the float from non-interest-bearing notes in circulation).

Under the present arrangements if a Northern Ireland bank collapsed during the week, its money would become worthless. The banks are not commenting on the proposals at the moment and have until 23rd of April to make their views known. New laws to put the proposals into practice are expected later in the year.

30 thoughts on “Money, Money, Money…

  1. That’s extremely interesting , Grannymar, thanks for the information. Looking at the last para, I’m glad our savings are in an English bank and not a local one! I had no idea an NI bank could collapse with no back-up whatever. I was also under the impression our banknotes WERE legal tender in Britain – that’s what I tell any awkward shopkeeper or cabbie who looks askance at them.

  2. This is so interesting Grannymar. I do know that it is not always easy to get shopkeepers to cash these notes here in England (I speak from experience).

    As an aside~we are getting new pictures on our coins~ there has been a lot of controversy because they are getting rid of Britannia and it is costing a fortune for the changes~ waste of ‘money’ if you ask me!

  3. Money, money, money… in a rich man’s world.

    ‘Tis a bit confusing all those sterling notes. I’ve definitely been turned away at times in the UK with NI sterling notes. Even as a Southerner, I take this as an insult 😦

    Having said that, if anyone wants to give theirs away, I’ll happily accept 😀

  4. In Scotland and Northern Ireland no banknotes – not even ones issued in those jurisdictions 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.

    From here:

  5. Nick ~ you should keep your money where it is.

    Chris ~ the notes have the word ‘Sterling’ on the front of them, but see Elly’s comment above.
    I wholeheartedly agree with you about the coins. To me the new design looks like the work of a child.

    Steph ~ I only showed the £10 notes. We have £5, £10, £20, £50 & £100 pound notes for each bank. Can you imagine the nightmare of counting large amounts for a bank lodgement? A £5 from one bank is similar in colour to the £10 of another.

    Elly ~ thanks for the link

  6. Damn, Elly got there first! 🙂

    There’s one advantage (of sorts) of the new arrangements the Scottish and Northern Irish banks will have to face: it will probably have the side-effect of making the banks more cautious in their dealings than the currently are, which means not doing anything that could cause them to ‘pull a Northern Rock’.

    Still, if I was the suspicious sort, it seems to me that, in part, this might be an effort to indirectly get rid of the practice of NI and Scottish banks printing their own money without risking annoying a bunch of grumpy Scots and Irishpeople by making the practice illegal. Not that I’d give in to that kind of paranoia or anything… 😀

  7. Hi Keith,

    The Treasury will recoup some of the £45 million a year the invested money raises for the Banks in NI. And the customers will pay for the pleasure of being reunited with their own funds at the ATM’s. No doubt there will be other painful surprises for the customers in due course.

  8. I suspect Keith might be right about a devious attempt to get rid of NI and Scottish banknotes altogether. In which case we’ll find life easier and not harder! Why do we need separate banknotes anyway?

    And I thought all banknotes were promissory notes, as none of them are actual money?

  9. That was very interesting. When I was in England and Scotland a few years ago, I found the money very confusing. When my daughter wasn’t with me to help me count, I just held out a handful of change and let the person behind the counter take what he needed. I don’t think anyone took advantage of my ignorance, although more than one person probably had a good laugh after I left.

  10. Betty the shop assistants are well used to counting out coins for people and seldom take advantage. They see it as a way to help customers and speed things up for those waiting in line.

  11. Of course, if the UK joined the Euro, these problems would not arise 😉

    (I can ski in Austria and summer in France with the cash in my pocket, but every time I go to the wee North I have to find foreign currency!)

  12. Ian

    I know that one. I keep a purse for my €’s and Elly got me an Easy Pass so there is no scratting about for Toll money. I travel through both Drogheda and M50 Toll bridges each time I visit her.

  13. This gets more and more interesting. According to Wikipedia, Bank of England sterling notes are only legal tender in England & Wales, not in Scotland or Northern Ireland. So technically we could make the same fuss about them as traders do with NI notes in England! And in any case NI notes are not legal tender anywhere, including NI!

    In fact banknotes don’t have to be legal tender to be used as money. It’s entirely a matter of agreement between the parties making the transaction.

  14. Thanks for the heads up, Grannymar. I used the Ulster Bank to exchange money the last time I was there. I was warned before my last trip that some notes expire so to beware of cabbies, as they may return expired notes for change. Is this true? 🙂

    I didn’t encounter any notes with expiration on them. I reckon these people were just out to foo me. What say you? 🙂

  15. Nick ~ I am busy printing off my autographed photo to use as ‘Money’ 😀

    Ian ~ I agree.

    JD ~ The only time you need worry is if you are offered a Soap Powder box full of bank notes! 😆

    Conor ~ I wish we did go the €uro road.

  16. I’ve come to this late and two thoughts occur to me:
    What a shame to do away with another “quaint” British
    peculiartiy 😉

    Don’t forget that the British Government is dominated by Scots…. what are they up to now? 😉

    Oh, something else… the Euro….Why? As a conspiracy theorist my thoughts go like this…Why let the French conquer us by stealth when they’ve failed so often since the Normans (who weren’t French anyway)? We’ve already given Napoleon his Tunnel under the channel! :-)) !!

  17. Magpie France is only one of the 26 countries using the €uro. The UK is the odd one out. While we are holding on to “quaint” the rest of the world is passing us by.

  18. If the banks start charging for withdrawing from ATM’s, there’s an easy and proven way to stop it! They tried that in Scotland when I lived there, basically if you withdrew any cash from your own bank’s ATM then no charge, but any other bank and it cost you.

    The people voted with their feet and went into the bank to make the withdrawals instead, causing hassle for the staff, overwhelming them with volume of customers and generating bad publicity. The scheme “vanished” a few weeks later.

  19. I remember several years ago asking to withdraw money from the bank branch where I had my account and was asked to go outside to the ATM!

  20. GM

    Just done a check…15 countries use the Euro.

    And now I’m going to avoid politics by keeping my mouth shut. 😉

  21. I have ways of making my Toyboys work!

    Magpie I knew that 26 was incorrect and wanted to see who actually reads the rubbish I write. 😉

  22. I do! 😆

    I reckoned it was incorrect too but Magpie got there before me and like a typical magpie, ‘stole’ my thunder 😉

  23. Yes, I knew 26 was incorrect too but naturally I didn’t want to embarrass Grannymar by suggesting she was having a senior moment. These oldies can be very sensitive you know….

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