what is pound
The British pound is the name of the national currency and monetary unit of the United Kingdom .
Sterling is primarily issued by the Bank of England, but there are other issuers as well. The symbol most often used to represent the pound is £. The ISO 4217 currency code taken by the International Organization for Standardization for the British Pound is GBP (Great Britain Pound). In addition to the United Kingdom, the currency of the British Overseas Territories is also denominated in pounds, and the exchange rate with the British pound is fixed at 1:1.
Development History
The British pound is the standard currency of the United Kingdom and is issued by the Bank of England, which was established in 1694. The currency unit was originally shillings and pence, 1 pound was equal to 20 shillings, and 1 shilling was equal to 12 pence. On February 15, 1971, the Bank of England implemented a new currency system, and the currency unit was changed to new pence, and 1 pound was equal to 100. New pennies. Banknotes in circulation are 5, 10, 20 and 50 pounds, as well as 1, 2, 5, 10, 20, 50 new pence and 1 pound coins.
The United Kingdom officially adopted the gold standard in 1821, and the British pound became the standard monetary unit of the United Kingdom, with 1 pound containing 7.32238 grams of pure gold. When the First World War broke out in 1914, Britain abolished the gold standard, gold coins stopped circulating, and Britain stopped exchanging gold. On May 13, 1925, the United Kingdom implemented the gold bullion standard. Later, it was forced to give up on September 21, 1931 due to the world economic crisis. The British pound evolved into an unrealizable paper currency. However , due to the needs of foreign exchange control , on December 18, 1946, the gold content of the pound was still 3.58134 grams.
By the beginning of the 20th century, the pound had been the most important means of international payment and reserve currency in the capitalist world . After the First World War, the status of the pound as an international reserve currency tended to decline and was gradually replaced by the dollar . During the outbreak of World War II, the United Kingdom implemented strict foreign exchange controls, fixing the exchange rate of the pound at a level of 4.03 US dollars per pound. On July 15, 1947, the United Kingdom announced that the pound would be freely convertible. Due to the rapid loss of foreign exchange reserves , foreign exchange controls were restored in August of the same year.
In September 1949, the United Kingdom announced a 30.5% devaluation of the pound, reducing the pound to $2.80 against the dollar.
On November 18, 1967, the pound depreciated again, and the exchange rate against the US dollar fell to 2.40 US dollars, and the gold content of the pound also dropped to 2.13281 grams.
After the floating exchange rate of the US dollar was implemented on August 15, 1971, the pound began to determine the price of the US dollar based on the constant gold content. After the official devaluation of the dollar on December 18 of the same year, the new official exchange rate of the pound to the dollar rose to 1 pound to $2.6057. The real exchange rate can fluctuate within a range of $2.5471 to $2.6643 per pound, with a volatility of about 4.5%.
On March 19, 1973, the eight countries in Western Europe formed a joint floating group, the United Kingdom did not participate and continued to float alone. In January of the following year, the pound real exchange rate became a managed floating exchange rate mechanism. In the same year, the sterling area shrank to include only the United Kingdom, Ireland, the Cayman Islands and the Channel Islands. The gold reserves issued in sterling are equivalent to at least more than 2.65 billion pounds.
On October 8, 1990, the British pound joined the European monetary system, and its exchange rate against various currencies in the monetary system fluctuated by 6%.
On September 16, 1992, the United Kingdom announced the temporary withdrawal of the pound from the European monetary system.
On February 22, 2013, Moody’s Ratings officially announced to downgrade the UK’s credit rating from Aaa to Aa1. Following the US in 2011 and France in 2012, it is now the UK’s turn to downgrade. This is the first time the UK has lost its top rating from an authoritative rating agency. In fact, Moody’s lowered the rating outlook of the UK sovereign and the central bank from stable to negative as early as February last year . After a year of observation, it finally officially lowered the rating. Recalling that Moody’s assigned the highest Aaa rating to UK government bonds in March 1978, Standard & Poor’s and Fitch both gave the UK the highest rating of AAA, but the latter two have negative rating outlooks on the UK, and it is estimated that they will also reassess the UK.
Moody’s concluded that there are three key reasons for the downgrade; first, the UK’s medium-term growth prospects continue to be weak, which Moody’s expects will continue to be weak for the next five years. Second, limited medium-term growth prospects challenge the government’s fiscal consolidation plan, which will continue into the next Congress. Finally, to make matters worse, UK debt is high and growing, and the government’s balance sheet capacity is gradually deteriorating, a situation that is unlikely to be reversed before 2016.
On May 29, 2015, the British government submitted and published a motion on the “Brexit referendum”, including the referendum question, and promised to hold a vote before the end of 2017.
Referendum date: June 23, 2016.
Referendum data:
51.9% agreed to leave the EU, a total of 15.7 million people
48.1% agree to stay in the EU, a total of 14.58 million people
Circulation area
The British pound is the official currency of the United Kingdom. After the euro was adopted, the pound became the oldest currency still in use. It accounts for the third largest foreign exchange reserves in the world, after the US dollar and the euro. The pound is the fourth most traded currency in foreign exchange, after the dollar, the euro, and the yen . While there is no fixed exchange rate between the pound and the euro, there is often a long-term synchronized movement between the pound and the euro, although this trend has weakened since mid-2006.
Concerns about inflation led the Bank of England to adjust interest rates since the second half of 2006 and early 2007, and the pound reached its highest price against the euro since January 2003. Interest rates are still expected to rise in 2007. On April 18, 2007, GBP/USD hit a new 26-year high, having breached the $2 level for the first time since 1992.
The idea of ​​replacing the pound with the euro has been controversial in some parts of the UK public sector because of its national symbolism. The Scottish Conservative Party claims that the introduction of the euro means the end of local banknotes, as the ECB does not allow member states or the next level of government to design banknotes. The Scottish National Party also does not agree with the adoption of a single European currency, because they believe that an independent Scotland should have its own unique currency, and its party policy includes entering a single currency system.
GBP against other currencies GBP can be bought and sold in foreign exchange markets around the world, and its value relative to other currencies fluctuates. Historically, the British pound has been the most valuable underlying currency.
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England and Wales
Under the Banking Charter Regulations of 1844, the Bank of England has the exclusive power to issue banknotes in England and Wales.
Scotland
Bank of Scotland
The Royal Bank of Scotland
Clydesdale Bank
Northern Ireland
Bank of Ireland
First Trust Bank
Danske Bank
Ulster Bank
British Crown Dependencies
Guernsey Government, Jersey Government, Isle of Man Government