The monetary system is a device of monetary circulation in the country, which is fixed at the legislative and historical levels. Monetary system is supervised by the government in accordance with the law. Each country has its own historical currency relations. The UK monetary system is the oldest in Europe. The British pound is the oldest monetary unit in force. Pound sterling was put into circulation in the 12th century in England.
British Pound History
For 8 centuries, the UK monetary system cannot be imagined without the pound sterling. The first mention of the currency can be found in sources of the 9th century. The word "sterling" itself is translated from German as "coin of the East." The first pounds were cast from silver by German craftsmen invited to Britain to work. It was they who called the coin “pound sterling, ” that is, a pound of silver. The coinage of silver money began in England in the 12th century.
In the 15th century, a golden pound was introduced. Until the end of the 18th century, a metal monetary system operated in the country. By the beginning of the 19th century, gold had completely supplanted silver, and the monetary system of Great Britain became monometallic. At this time, it became possible to exchange gold coins for paper tickets of the Bank of Britain. The currency was fully secured by gold, and the number of banknotes corresponded to the amount of precious metal circulating in the country.
In 1914, banknotes appeared, and gold money was gradually withdrawn from circulation. The pound has become the reserve currency. Now up to 80% of international transactions are made in pounds sterling.
The gold supply system ceased during the 1930 crisis. The British pound has lost its popularity, and it was replaced by other currencies. Over the past 30 years, the volume of international payments in UK money has fallen to 3% of the global total.
UK modern currency
After the transfer of the UK monetary system to the decimal system, 1 pound became equal to 100 pennies (pence). From 1971 to 1982 there was already an inscription on small coins: "New penny." Prior to that, in the Kingdom the pound was divided into 20 shillings, which were equal to 240 pence. An inconvenient settlement system came to Great Britain during the reign of the Roman Empire.
Today, the Kingdom uses paper money and coins. Banknotes are printed in denominations of 5, 10, 20 and 50 pounds. Coins are issued in denominations of 1, 2, 5, 10, 20, 50 pence. The first two copper coins are rarely seen in circulation, like a 5 pound note.
Pounds are used throughout England, Wales, Northern Ireland and Scotland. Currency can be used in the overseas territories of Great Britain: the islands of Gibraltar, St. Helena, Ascension and Maine, the Falkland Islands.
The international designation of the British pound is GBP. On the obverse of the banknotes is the reigning Queen Elizabeth II. Famous personalities are depicted from the inside - writers, scientists, statesmen.
In some regions of Britain, for example in Scotland, the euro is used along with the pound. Some central banks in Northern Ireland and Scotland print their own design banknotes.
Inflation
The British pound is one of the most stable currencies in the world. The kingdom is in fifth place in terms of inflation. Over the past 5 years, the national currency has fallen by only 7.22%. The UK inflation rate in 2018 was 2.4%. At the same time, the growth in incomes of the country's population caught up with inflation. From which we can conclude that the depreciation of money will not make a hole in the pockets of the country's inhabitants.
UK prices
The United Kingdom has the second largest economy in the European Union. A high level of medicine, decent wages, a good standard of living - all this can be found in the UK. The average salary in the country is 2010 euros. But you should always remember that life on the islands is not cheap at all. Prices in the UK bite a lot.
Rental housing (one-room apartment) on average will cost 605 euros per month. In London, this figure is twice as high. Monthly utility bills for electricity, water, gas and household waste are on average 140 euros. Internet costs 27 euros, and monthly transport costs are 68 euros.
The British prefer to buy food in chain supermarkets. Often eat out. Food is expensive. Milk (1 liter) - 1 euro, a dozen eggs - 2 euros, a kilogram of chicken - 5 euros, a loaf of bread - 1.2 euros. An average lunch in a restaurant for 1 person will cost about 20 euros, and a hamburger dish in Britain can be purchased for 6.3 euros. The British spend up to a quarter of their monthly income on entertainment.
Cashless and cash payments
The main method of payment in the UK is cashless payment. UK banks annually make about 68% of non-cash payments from deposits and credit accounts of citizens. Paper money still accounts for 32% of cash transactions. This popularity of banknotes is due to a rare phenomenon in Britain - the commission. Some sellers in remote areas of Britain may charge a fee for cashless payments. The seller is obliged to inform the buyer in advance that in his institution will have to pay an additional fee by hanging a sign at the entrance.
Banking system
The financial system of the United Kingdom is divided into 2 parts: the banking system and third-party financial institutions. The latter category includes insurance and construction organizations.
The banking system is the aggregate of all the monetary institutions in the country that have a license to conduct activities issued by the Central Bank.
The UK banking system includes the following structures:
- national commercial banking institutions and merchant banks;
- foreign banks;
- accounting houses.
Central Bank and its functions
The monetary system of Great Britain is regulated by the Central Bank. Formally, the banking sector is separate from the state, but subordinate to the government.
The Bank of Britain performs a number of the following functions:
- It is a bank for all commercial banks. Commercial banks are required to have accounts with the Central Bank.
- Banks of other countries have foreign currency accounts with the Central Bank of the United Kingdom.
- Government accounts are open with the Bank of England. All tax payments and other budget payments go through the Bank.
- The bank regulates interest rates on loans.
The Bank of Britain has fixed mortgage payments. The interest rate on the loan may not exceed 4.5%.
