The British pound, which has been used for over 1,200 years, is the oldest currency in the world. Dating back to Anglo-Saxon times, the pound underwent many changes before becoming the currency we know and use today. The pound is both the oldest and one of the most traded currencies in the world. As today, it ranks fourth. The most traded currencies in the world are as follows - the US dollar (USD), euro (EUR) and Japanese yen (JPY).
But what we actually know about the history of the British pound, in which countries it is used and how exactly it was first created - this is what we will tell you in today's article.
Name and symbol of the British pound
The name of the pound sterling comes from the Latin word "libra", which corresponds to balance and weight. The currency sign for the pound is £, which is usually written with one cross line. A variant with a double transverse line (₤) was used in parallel with £ only in the earliest banknotes of 1725. Historically, the symbol derives from the letter "L", written in many old Latin documents, where it meant the word "libra" or weight (balance). It is also the official Latin and then English unit of weight.
What is the history and origins of the British pound?
The Bank of England first issued the pound banknotes more than 300 years ago, and they have undergone several changes over the years. The pound coin, on the other hand, first appeared in 1489, during the reign of Henry VII. And banknotes began circulating in England in 1694, shortly after the creation of the Bank of England, and the banknotes were originally handwritten.
Prior to that, in 1660, the minting of coins was mechanized and features such as letters and ornaments were introduced in their design to eliminate the possibility of illegal removal of the surface silver or gold layer of coins.
After a long history, the British pound continues to exist today, although much of the rest of Europe already uses the euro as its common currency. The pound is still used within the UK - England, Wales, Northern Ireland and Scotland.
In 1971, the United Kingdom granted the British pound independence, among other currencies, a decision that allowed market factors to determine the value of the currency rather than artificial conditions. Later in 1990, the United Kingdom even considered attaching the value of the British pound to the German mark, but soon rejected the idea. In 2002, after the euro became the common currency of most EU Member States, the United Kingdom chose not to follow it, instead deciding to keep the pound as its national currency.
The introduction of the decimal system
The introduction of the decimal system is the biggest change in Britain's monetary system in its long history. It was not until 1971 that the British pound was divided into 100 pence, with 12 pence forming one shilling and 20 shillings forming one pound. The £ 1 coin, in turn, was introduced in 1983 to replace the £ 1 banknote. The reason for this is that banknotes are torn and destroyed much faster and easier, and coins usually last much longer. At the time, Margaret Thatcher, the British prime minister, believed that coins were "not very popular" and that the pound banknote should be preserved nonetheless. It is because of this decision that £ 1 banknotes are still issued in Scotland, Jersey, Guernsey and the Isle of Man, along with £ 1 coins, which are used significantly more frequently.
The Bretton Woods system
Until 1940, the British pound was tied to the value of gold. However, in 1940, an agreement with the United States stated that the pound sterling was changing to be pegged to the US dollar as part of the Bretton Woods system, which monitored post-war exchange rates. Between these years, until 1971, the pound depreciated against the dollar due to economic pressure, and after the collapse of the Bretton Woods system, the pound became a free-floating currency.
What do we know about the appearance of the British pound?
Each British pound banknote (£ 5, £ 10, £ 20, £ 50) has its own color and size - the higher the value, the larger the banknote. All coins (1p, 2p, 5p, 10p, 20p, 50p, £ 1 and £ 2), in turn, bear the profile of Queen Elizabeth II, turned to the right, and according to tradition, monarchs alternate the direction in which they are turned. The first banknote with the portrait of the Queen was a £ 1 banknote issued in 1960 after taking office earlier in 1953.
Thin metal threads were first embedded in banknotes in 1940. This acts as protection against counterfeiting during World War II, when the British economy was under threat. As we said, the British pound is used within the UK, but its variations also circulate in Jersey, Guernsey, the Isle of Man, Gibraltar, the Falkland Islands, St. Helena, Ascension, Tristan da Cunha and South Georgia and the South Sandwich Islands.
For several years, the euro posed a significant threat to the pound. There has been pressure from other EU countries, and even internally in the UK, for the UK to adopt the euro as its official currency. But according to some experts, looking to the future, there is a good chance that the pound will survive the euro, given the political instability in Europe in recent years, with Brexit being just one example. It is these internal turmoil that could potentially lead to the collapse of the eurozone and the region's single currency, making the British pound the most powerful currency in Europe.
The British pound and the beginning of modern lending
The British pound is not only the first currency in circulation, but it is also the first currency to be used to repay modern loans. According to historical data, lending first appeared in Britain in 1803. It was started by a group of English tailors who gather and exchange information about their clients who have failed to pay their debts or have delayed their contributions. This is very reminiscent of modern banks and financial institutions, which monitor whether the borrower meets its obligations under the terms of the loan.