Thursday, December 27, 2007

Scottish bank notes -- time for a change?

LONDON (Reuters) - Scottish banknotes, widely spurned by shops south of the border, should be legally protected in England, the Liberal Democrats say.

"It is ironic that many shops and businesses in London have signs indicating that they will accept Euros, but at the same time continue to refuse Scottish banknotes," said Shadow Scottish Secretary Alistair Carmichael.

"Scots in England have no legal recourse whatsoever when their banknotes are refused, leading to embarrassment and irritation. This situation is the result of historic accident and it is now time to address it."

Unlike in England, where notes are the monopoly of the central bank, in Scotland they are issued by the three largest private banks, the Bank of Scotland, the Royal bank of Scotland and Clydesdale Bank.

In fact, all Scottish banks are allowed to produce their own notes, provided they were established before 1844 when an Act of Parliament removed the right for new banks to issue notes.

At that time, there were 15 banks in Scotland eligible to issue notes but the number has since dwindled to the big three.

Scottish bank notes are not "legal tender" even in Scotland, meaning anyone owed money can refuse to accept them.

Scottish banks do not produce their own coins, that right being the monopoly of the Royal Mint.

In England and Wales, the last private bank note was issued in 1921 by the Fox, Fowler and Co. bank in Somerset.

The Bank of England declined to comment on the LibDems' call, noting that the status of Scottish notes was a matter for government and parliament.

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