The British pound, or actually pound sterling (£) is the legal tender in the United Kingdom including of course Wales, Scotland and Northen Ireland.
|British Pound (GBP)
Last update: 01:30:55
The British pound (GBP) is the oldest currency still in use in Europe. Although reformed a number of times, it has maintained its historical continuity dating back to the time of Henry II who put the currency into circulation in 1158. Its official name of pound sterling is related to a three-fold subdivision of the money, which was maintained until 1971 when the globally common decimal system was introduced.
The value of the pound is maintained at a high level. It is currently one of the strongest currencies in the world, and until the 1930s was even the key payment instrument in international trade. It is worth mentioning that the end of the last century was not very favourable for the pound as ill-thought-out policy by the British Chancellor of the Exchequer (Treasury Minister) to peg the pound to the German mark and the ERM system, not to mention irrational increases of interest rates led to the attack of currency speculators, the collapse of the currency and economic recession in the UK. The attack on the pound was led by Georg Soros whose hostile actions led many countries to the verge of bankruptcy (such as Italy, Malaysia as well as Poland).
Today’s pound is not yet the currency it used to be at the beginning of the previous century, which makes it reliant on the global system that is sensitive to any market disruptions. However, for several years now, especially in the conservative community, initiatives appear to back the British pound again against gold. However, this is a rather difficult task, particularly in a country that has quite a significant debt based mainly on bonds. Fixing of the pound’s exchange rate would then be very unfavourable for the state and, in many cases, could also be in violation of the laws applicable on the British Isles and elsewhere. For conservatives, including the current Chancellor of the Exchequer, George Osborne, such a step would be possible as the reserves of the Kingdom would allow the initiation of special programmes related to debt repayment and possible resolution of a short-term recession.
However, for the opponents of the concept, mainly from the Labour Party, but also including some of the conservatives currently in power, the risk related to fixing the currency to gold is too high and may bring immeasurable losses in the future if gold starts to lose its value. Such a deadlock situation puts the future of the English currency seriously in question, although we may be almost absolutely certain that even in the event of a crisis, the Brits will not easily abandon their symbol of economic independence and the actual witness of their historical empire.
The most important question today is the relation between pound sterling and euro, which is related to Britain through the UK’s membership in the European Union. The current conservative British government does not intend to enter the Eurozone either under the ERM II system, or to the Eurozone generally, and still wants to benefit from the opt-out clause towards the Treaty of Maastricht. Unfortunately, the crisis in Euroland countries is doing nothing to change the opinions of British politicians nor the entire British society, which means that Europe does not have to be afraid of the hegemony of a single central bank whose existence if certainly not a perfect solution at the current level of integration.