The British pound is the world's oldest currency still in use – it's 1,200 years old. Dating back to Anglo-Saxon times, the pound has gone through many changes before evolving into the currency we recognise today.
Sterling silver pennies have been around since 775AD, with King Offa of Mercia generally credited with being responsible for the widespread adoption of the coins. The first fully printed banknotes were introduced in 1853. Before that, following its establishment in 1694, the Bank of England only issued partially printed notes with the '£' sign as well as the first digit. The numbers had to be added by hand and each note had to be signed by one of the bank's cashiers. Today's banknotes developed out of these original handwritten notes.
One of the world's most traded currencies
The pound is currently the fourth most traded currency in the foreign exchange market, after the US dollar, the euro and the Japanese yen. Each bank note (£5, £10, £20, £50) has its own colour and size – the greater the value, the larger the note. All coins (1p, 2p, 5p, 10p, 20p, 50p, £1 and £2) carry the profile of Queen Elizabeth II, facing right. Traditionally, monarchs alternate the direction they face on pound coins. The first banknote featuring the Queen's portrait was a £1 note issued in 1960.
Thin metal threads were embedded in banknotes in 1940. This acted as protection against forgery during the Second World War, when the Nazis launched 'Operation Bernhard' with the aim of ruining the British economy. The pound is not only used in the UK. It also circulates in Jersey, Guernsey, Isle of Man, Gibraltar, Falkland Islands, Saint Helena, Ascension, Tristan da Cunha, South Georgia and the South Sandwich Islands.
Decimalisation was the biggest change in Britain's monetary system. The pound was divided into 100 pence in 1971. Until then, there were 12 pennies to the shilling and 20 shillings to the pound. The £1 coin was introduced in 1983 to replace the £1 note because coins usually last much longer. At the time, Margaret Thatcher, the prime minister, believed coins were 'not very popular' and the pound note should be retained. £1 notes are still issued in Scotland, Jersey, Guernsey and the Isle of Man, along with the £1 coins, which are more commonly used.
One of the rarest British coins is the 1933 penny. A small number were produced that year because there were already plenty around. In fact, it's estimated that there were only seven coins and, due to tradition, three of them were buried in the foundation stones of buildings erected in 1933. More recently, the London 2012 Olympics 50p coins proved to be popular among collectors. More than 70% of them have been taken out of circulation, estimates the Royal Mint.
The £2 coin was launched in 1986 to commemorate the 13th Commonwealth Games held in Scotland that year. All pound coins, except the £2 ones, were redesigned in 2008. The six coins, from the 1p through to the 50p, can be pieced together to form the Royal Shield. The £1 coin features the complete shield.
The Bank of England introduced a new 12-sided £1 coin on 28 March 2017, and the previous £1 coin lost its legal tender status at midnight on 15 October 2017. Since then, the Bank has also replaced paper banknotes with plastic notes. A new polymer £5 note was issued in September 2016 and paper £5 notes were withdrawn. Plastic £10 notes were also issued on 20 September 2017 and £20 notes have been following since the 20 February 2020. The polymer notes are more durable, stay cleaner for longer and are harder to fake, but have also caused some controversy as they contain a product derived from animal fat.
For a few years, the euro posed a significant threat to the pound. There was pressure from other EU countries and even within Britain indicating that the UK should adopt the euro currency. Arguably, common sense prevailed and the likelihood is that the pound will probably outlast the euro as Europe grapples with a crisis that could potentially tear the eurozone apart.