Cash GBP: history, evolution, and uses of the british cash

The British pound, or pound sterling, is the sole legal tender in the United Kingdom of Great Britain and Northern Ireland, as well as some of its overseas territories and dependencies. It’s currently one of the top-5 traded currencies on the Forex market and is one of the leading types of money in international commerce.

Its cash form remains a widely spread and readily recognizable variety of this currency, despite the increasing dominance of online banking, cards, and other cashless means of payment. A physical and tangible GBP remains an iconic item, and there’s a lot to say about it in terms of its history and applications.

Denominations and design

There are currently 4 primary banknotes of GBP in circulation:

• £5. The current 2016 design is turquoise in appearance and features Queen Elizabeth II as the obverse and Winston Churchill as the reverse.
• £10. The current 2017 design is orange in appearance and features Queen Elizabeth II as the obverse and Jane Austen as the reverse.
• £20. The current 2020 design is purple in appearance and features Queen Elizabeth II as the obverse and J. M. W. Turner as the reverse.
• £50. The current 2021 design is red in appearance and features Queen Elizabeth II as the obverse and Alan Turing as the reverse.

There are also a number of GBP coins, which include coins for 1, 2, 5, 10, 20, and 50 pence, as well as £1 and £2 coins. Most have several designs, and at least one, the 2022-issued 50 pence coin, already features King Charles III. Each variety is equally accepted in circulation until such a time when they are withdrawn from it.

There have also been historic banknote denominations, including a now-withdrawn £1 note. All banknotes are issued in accordance with the 2008 ‘Banking Act 2009,’ issued by the government in the middle of the economic crisis. The Act is an updated rulebook for how banknotes are to be used, but the law is largely based on the preceding rules.

Historical evolution

The banknotes changed design multiple times over the years. Even the latest designs, such as the 2016 5-pound note, underwent several minor changes since it was first introduced. The contemporary form, introduced in the 70s by the government, had at least 4 major redesigns.

Another is expected in 2024, scheduled to bear the liking of the new king. These didn’t just change in denominations and appearance (for instance, a £1 banknote has been known to circulate until the 80s). The material also changed from paper to polymer sometime in the 90s.

Issuing authority

The main, iconic, and widely recognized type of GBP is issued by the Bank of England—the supreme and central bank of the country. The notes released by the bank are meant for international and broad domestic use. However, it’s not the only type of money available within the UK.

Curiously, Scotland and Northern Ireland have their own banknotes, issued by the local Banks of Scotland and Northern Ireland respectively. They are considered ‘official,’ although not given the status of legal tender. They are accepted commonly, but not universally even in their particular ‘jurisdictions’.

Crown dependencies, like the Isle of Man and the Channel Islands, accept plain British banknotes, although also have their own local designs, often used by merchants in these areas. Like the Scottish and N. Irish money, they don’t have a status of legal tender and aren’t really seen outside of these territories.

Overseas territories largely issue their own currencies. For instance, the Falklands utilize their own Falkland pound. Such currencies are technically legal tender in their jurisdictions, in addition to being pegged to GBP proper. In practice, the two are used interchangeably, while you can’t use overseas pounds in metropolitan UK.

Currency exchange

With cashless GBP, the situation is largely clear for everyone. You can purchase GBP on the Forex market and store it in some capacity online. You can even pay for goods and services with it, but it would be hard to convert it into ‘paper’. That said, you can naturally exchange your other money for cash pounds in Britain and abroad.

The three main methods of exchange include:

• Banks. You can often buy GBP in some banks outside of the UK.
• Specialized exchange offices. These are present throughout the UK and in some airports close to the country.
• Automated exchange machines. These are similar to ATMs, except their sole purpose is to exchange your money for British cash.

These are the three legal ways of exchanging money. It wouldn’t be ‘unlawful’ to swap euros for pounds with an individual, but that’s how people are swindled. Moreover, the exchange rate is set by the British authorities based on the parameters of the free market, and it’s almost always the most beneficial exchange rate for you.

Significance and acceptance

Until the end of WW2, much of the British Empire used the British pound as the legal tender in one way or another. It was either GBP straight up or a local currency that was pegged to the former. Until that point, the pound was also the go-to currency for finance and banking worldwide.

After the war, the pound was replaced in this role by the American dollar. That’s precisely why many British dominions use dollars, rather than pounds (Australian dollar, Canadian dollar, New Zealand dollar, Hong Kong dollar, et cetera). At the moment, the pound is still used widely in commerce and finance, but it’s now just a shadow of its former glory.

Moreover, its significance keeps diminishing as the economic power of the country deteriorates. The British pound isn’t often used even in informal, grey sectors of the global economy. Euro and dollar are considered a more stable type of money. In continental Europe, even the Swiss franc is often preferred over the pound as of 2023.