The pound is the official currency of the United Kingdom (made up of England, Scotland, Wales and Northern Ireland). It has persevered through the years and has survived as an independent currency while most of the rest of Europe adopted the euro.
Despite its recent struggles it has remained robust and kept its strength in the face of inflationary pressures and various economic and political challenges.
In the months after the Brexit referendum in 2016, it had suffered an initial 10%-15% plunge but it has mostly recovered. It has been particularly cheerful since the pandemic, with the exception of September when then-Prime Minister Liz Truss’s fiscal plans temporarily crashed UK markets.
Apart from its enduring strength, as a result of the country’s economic health and stability, the pound sterling is also considered the oldest currency in circulation and its origins can be traced back to continental Europe.
For more than 300 years the Bank of England has been the authority issuing pound banknotes, with the notes undergoing various changes throughout the years.
Libra: A name that carries weight
The name of the pound comes from the Latin word “libra” which means weight and balance. In ancient Rome, the unit of measure was “libra pondo,” which meant “a pound by weight.” So, the English word “pound” originates from the “pondo” part of the phrase, but the abbreviation “lb” for the unit of mass comes from the “libra” part of the phrase. The word libra is also present in the ornate “L” of the symbol of the pound “£.”
The connection with mass goes back in time when the value of the pound was equated to the price of a pound of silver. Reflecting the ancient Roman system of libra, solidus and denarius, a pound was divided into 20 shillings and 240 silver pennies. In the Frankish kingdom under Charlemagne, there was a similar system of one livre to 20 sous and 240 deniers.
Banknotes, pennies and shillings
The first pound coin appeared in 1489, under the reign of Henry VII. The first handwritten pound banknotes came into circulation in England after the foundation of the Bank of England in 1694. At the time, the pound was based on a complex system of shillings and pennies until 1971, when the decimal system was introduced.
In 1660, the use of side lettering to stop money-clipping was made possible by the mechanisation of coin minting.
The fate of those devaluing the pound
A medieval king marked the fate of those who debased the currency in blood. According to David Sinclair’s The Pound: A Biography, in 1124, Henry I castrated currency officials to punish them for producing sub-standard or counterfeit coins.
The use of “Sterling”
The word “Sterling” originally referred to pennies and not pounds. The word’s origins can either be found in the Norman word esterlin, which means little star, or in the Arab word lesterling, which means money. The quality of coins improved under Henry II, and in 1282, under Edward I, the purity of coinage was formally tested in a ceremony which survives to this day and is called the “Trial of the Pyx.”
To make the coins more durable, their silver content was reduced to 92.5% and this came to be known as Sterling Silver. During Henry VIII’s reign, the silver content of the coins was reduced significantly and became known as the Great Debasement.
The “Pound Scots” existed until the creation of the 1707 Union Act. The new monetary system was based on the value of the pound south of the Scottish border.
The Bank of Scotland, which was established in 1695, a year after the Bank of England, has the right to print its own banknotes, but their value is equivalent to their southern counterparts since the unification.
Managing the value of Sterling
While the value of Sterling has been determined by various monetary systems or mechanisms, including the Gold Standard, the Bretton Woods system and the European Exchange Rate Mechanism, the current standard is floating exchange rates with the value of the pound being influenced by supply and demand.
There are currently in circulation four different denominations of Bank of England banknotes: £5, £10, £20 and £50. A £1 note is also printed in Scotland.