Banknotes

Banknotes

Banknotes
Until the middle of the 19th century, privately owned banks in Great Britain and Ireland were free to issue their own banknotes and money issued by provincial English,[2][3][4] Welsh,[5] Scottish[6] and Irish banking companies circulated freely as a means of payment. As gold shortages affected the supply of money, note-issuing powers of the banks were gradually restricted by various Acts of Parliament,[7] until the Bank Charter Act 1844 gave exclusive note-issuing powers to the central Bank of England. Under the Act, no new banks could start issuing notes and note-issuing banks gradually vanished through mergers and closures. The last private English banknotes were issued in 1921 by Fox, Fowler and Company, a Somerset bank.[7] However, some of the monopoly provisions of the Bank Charter Act only applied to England and Wales.[8] 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.[9][10] 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.[11] 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 set about replacing the private banknotes with a single Consolidated Banknote Issue in 1928.[12] In 1928 a Westminster act of parliament reduced the fiduciary limit for Irish banknotes circulating in Northern Ireland to take account of the reduced size of the territory concerned.