Especially if you’re a CTer who distrusts banks and has a very large stash of very small bills.
Or equivalently, if you’re somebody in the underground economy with lots of undeclared income & profit stored in suddenly-obsolete banknotes. c.f.
Oops.
I think that Canada, the States, the UK and Australia make up the exclusive club of nations which have never démonétisée their coins and notes. Maybe New Zealand as well.
I’m not old enough to personally remember it, but coins/stamps/etc featuring the previous monarch/glorious leader usually keep circulating until they’re used up/worn out.
As far as I’m aware the only instant replacement of currency/stamps was in Germany in 1945, because it was covered in swastikas and other Nazi regalia, including this guy.
Not true for the U.K. Old banknotes become invalid, in fact this is happening for all paper banknotes at the end of September. Although, as I said above, you can always still exchange them - it appears that you would have to go with your grandma’s stash to the Bank Of England.
After 30 September 2022 Bank of England paper £20 and £50 notes will no longer be legal tender. This means that shops and other businesses should stop accepting paper notes after this date. We would encourage people to spend or deposit their remaining paper notes in advance of the withdrawal of legal tender status. Many banks will continue to accept paper notes as deposits from their own customers after 30 September 2022. The Post Office may also accept withdrawn notes as a deposit into any bank account you can access at the Post Office. Withdrawn notes are always able to be exchanged with the Bank of England.
Yes, but the notes are still valid. As you say, it can be a bit cumbersome to exchange them for modem notes, but they still have their face value. Unlike the Indian notes mentioned by @LSLGuy , or the roubles that were demonitised by Russia, or the reichmarks that were demonitised by Weimar Germany, and so on, which are just waste paper.
Ceasing to be legal tender is not the same as no longer valid.
For example, the Bank of Canada has withdrawn its thousand dollar note, but if you have one, it still has its face value. You just have to make a special arrangement with a bank to exchange it.
There was a movie about this sort of thing.
Excellent movie, by the way.
The British are known for their reserve and for keeping their emotions in-check. Yet their movies tug at the heartstrings.
My wife talked to her cousin in New Zealand yesterday. She said that the existing supply of money with QE will be issued before before any new is minted or printed with KC. New 20 dollar bills will take about a year and it will take a couple years for coinage. I still have some NZ money left over from our trip there 9 years ago, I would hope it would still be good next time we go. Our plans are to return in 2025.
Surely not by any normal definition of “valid”, unless it has some technical meaning I’m unaware of? You cannot buy stuff with them! If something cannot be used for its intended purpose, I think it would be confusing to tell someone it is valid.
The vocabulary I would choose is that (unlike the Indian example) they are not worthless, since (with considerable inconvenience) the BoE will still exchange them.
“Will pay to the bearer on demand”.
It’s a mark of the stability of a currency - government notes hold their face value. The central banks will honour the notes.
As I said, as opposed to the rouble and rupee notes that have no value whatever, except possibly as collector items.
As a matter of interest, does this have any significance with a fiat currency? It’s obviously a legacy from when the issuer would pay gold or silver. But when my £20 note says:
I promise to pay the bearer on demand the sum of £20
that seems a little circular. The plain English reading is that it’s just meaningless, it’s not explicitly an assurance that the Bank will always exchange it for some other physical instantiation of £20 that is legal tender, although I guess you could interpret it that way.
It’s not circular, in the case of a withdrawn note. If you go to the bank with a £20 note that’s been withdrawn, and the bank branch is one of the ones that is authorised to take it, they’ll take the withdrawn note and give you a nice crisp new £20 note, or add some binary 1s and 0s to your account.
The withdrawn note still has value, and the Bank of England will take it in and give you £20 for it.
No merchant is required to take your old note, because it’s not legal tender, but the Bank of England will honour it.
I think the UK flat-out demonetizes its obsolete coins. From the Royal Mint’s page on the 50 pence coin, for instance:
First Issued Smaller version introduced September 1997 (Larger version introduced October 1969, demonetised in 1998)
We’re agreed on the facts of what will happen as matter of policy. You have not yet convinced me that the phrase
I promise to pay the bearer on demand the sum of £20
necessarily provides legal underpinning for that.
See the Currency and Bank Notes Act 1954, 2 & 3 Eliz II, c. 12, s. 1(4).
The section overall makes it clear that Bank Notes can always be exchanged, even if not legal tender.
Having to travel to “the head office of the Bank of England” to exchange one’s bank notes really isn’t practical for many people.
Demonetize may not have the meaning you think it has. Yes, it has been deprived of its status as money, in the sense that you cannot use it to buy something, but it still retains its value as half of a GBP. That is, one can take it to the bank and exchange it for a current 50p.
People with old coins are well advised to check and see if their market value is more than their face value.
True, but that’s the legal guarantee. How it will be implemented will vary with the banknote.
For example, the Bank of England has declared that the paper £20 and £50 notes are being replaced with polymer ones, and that effective September 30, the paper ones cease to be legal tender. However, it will be easy to redeem those notes after that date, as set out on the Bank of England webpage:
But the older the note, the more likely you’ll have to make special arrangements with the B of E. If you’re trying to exchange a note from 1700, for example, you’ld probably have to make special arrangements.
Bottom line, though, is that you’ve got a legal guarantee that notes keep their face value.
No, Section (4) that you highlighted does not address recalled notes. It says that the Bank will exchange notes of a higher denomination for notes of a lower denomination. It does not say that this applies to notes of higher denomination that are no longer legal tender. If the intent of (4) is to include the exchange of recalled banknotes, why conflate that issue with the higher/lower denomination issue, and why have a different section below that does specifically address recalled notes? My read is that Section (4) requiring the exchange of higher denominations for lower denominations relates to the fact (see Section (2)) that higher denominations are legal tender only in England and Wales, whereas lower denominations are legal tender throughout the U.K.
Section (5) is the only one that explicitly addresses recall, requiring one month’s notice during which the Bank must exchange recalled notes. It does not say that the Bank is legally obligated to do anything after the date when recalled notes cease to be legal tender.