The Sterling Area

Started by Galapagos, October 06, 2009, 05:23:53 PM

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Galapagos

#15
Also from that link:

"If the United Kingdom does adopt the euro at some future date, the Committee intends to consult with the authorities in Alderney and Sark and take a policy letter to the States of Deliberation in Guernsey to bring about the necessary changes in local currency arrangements so that the Bailiwick will also adopt the euro."

So this would be Guernsey consulting its dependencies of Alderney and Sark. It doesn't mention Herm, its smallest inhabited public dependency. (The Barclay Brothers own the smallest inhabited private dependencies, I believe). Does this mean that Guernsey would allow its dependencies to adopt a different currency from itself? In theory then, possibly. It would hardly be practicable, though, for such tiny entities.

According to this link:

http://en.wikipedia.org/wiki/Banknote_of_Alderney .

"A 1 pound banknote was issued in 1810 by the Alderney Bank. It is very rare."


Galapagos

So here we have another anomaly: the Crown Dependencies are in a currency union with the UK. If I take Guernsey as an example, because it's my favourite of the islands, Guernsey uses sterling but issues its own coins and notes. UK coinage and notes are accepted in Guernsey (whether or not they are actually legal tender, I don't know, but I imagine they are). However, Guernsey notes and coins are definitely not legal tender in the UK, and most shops and businesses will not knowingly accept them.

Contrast this with that other currency area, the euro zone. French euro coins (i.e. with a French national side) are legal tender and accepted everywhere else in the euro zone, which is logical. Imagine a situation where they are not, despite being the same currency. That is the situation you have in Guernsey and the other Crown Dependencies.

The European Central Bank, I understand, sets the limits for each euro-using country of how many of their own national euro coins they can issue. Is it likely that the Bank of England will have similar powers regarding the amount of Guernsey coins and notes that are issued, etc.? Or is this the business of Guernsey alone? Maybe Christian would have a view on that, as he's good on the technical/legal side of things.

Already we have various situations with the euro. It is used by authorised members of the euro zone. It is used unilaterally as the sole official currency by countries such as Montenegro. Some other countries peg their currency to the euro. For some this will be as part of their commitments under the ERM, others possibly do it unilaterally. But the EU has confirmed to Guernsey that, if it adopted the euro, it would be allowed to issue its own unauthorised versions of euro coins and notes. Now that would be a first in euro terms, and it would again raise the question of who would control their issuance and the amount issued: Guernsey, the UK or the EU? Presumably not the EU, if such issues were unauthorised but not forbidden by the EU. Complexer and complexer...


chrisild

Quote from: Ice Torch on October 07, 2009, 04:09:29 PM
But the EU has confirmed to Guernsey that, if it adopted the euro, it would be allowed to issue its own unauthorised versions of euro coins and notes.

While the euro was what caused that discussion in Guernsey, I would handle this part (about issuing euro notes and coins) with extreme care. :)  After all, since the UK did not "switch", there was no need to seriously go into details about this. What I found interesting in the documents was that Guernsey (and Jersey, probably the Isle of Man too) does not "automatically" use the pound sterling. They are free, at least according to that Working Group, to have their own currency or to join some other currency area instead ...

Christian

Figleaf

A long time ago, I was a member of a UN committee that was tasked with finding a solution for a minor problem. I proposed a solution, according to my instructions. A professor of international law in the French delegation declared almost angrily that the proposed solution would not be in accordance with some rule of international law. The chairman reacted with "if there is a political will to do it this way, it can be done". End of discussion.

My point is that all these (semi) fly-specks are autonomous only as long as Britain allows it. If some obscure British civil servant determines that this or that island shall use the pound or the euro, that's the end of the discussion, whatever the legal options are.

Another good illustration is the episode where I complained to the Gibraltar government about a commemorative series that had the date of the British sovereignty over Gibraltar wrong. I was ignored, until I sent a copy of the complaint to the British government. Not because I insisted, but because the Gibraltarians can't afford to offend the UK government, even in the smallest way.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Galapagos

#19
Quote from: Figleaf on October 07, 2009, 08:53:43 PM
...all these (semi) fly-specks are autonomous only as long as Britain allows it. If some obscure British civil servant determines that this or that island shall use the pound or the euro, that's the end of the discussion, whatever the legal options are.

Assuming that the offended island is unable to get up a campaign and get the press on its side. Governments can be embarrassed by people power. A rare example in the UK, though not to do with sovereignty, was the poll tax riots of 1989/90, which I'm sure were in part influenced by people watching (on TV) the East Europeans taking power into their hands.

Realistically, I don't know what the UK govt would gain by requiring these "specks" to use one currency rather than another. It wouldn't be worth their effort.

Quote from: Figleaf on October 07, 2009, 08:53:43 PM
Another good illustration is the episode where I complained to the Gibraltar government about a commemorative series that had the date of the British sovereignty over Gibraltar wrong. I was ignored, until I sent a copy of the complaint to the British government. Not because I insisted, but because the Gibraltarians can't afford to offend the UK government, even in the smallest way.

Nice tactic!

paddyirish

Thanks for this Ice Torch - excellent reading and I've learned a lot

Galapagos

Quote from: paddyirish on October 07, 2009, 10:38:18 PM
Thanks for this Ice Torch - excellent reading and I've learned a lot

I'm learning as I go along and really enjoying the journey. To think that Andy started it all off by telling me that the Gibraltar pound was a separate currency, at par with the UK pound. I'd assumed that it was our UK pound, but with its own coins and notes, just like Guernsey, or Scotland with its notes.

BC Numismatics

#22
  The British Indian Ocean Territory is also part of the Sterling area,as the Pobjoy Mint have started striking medal-coins for that place.

Unusually,the British Armed Forces don't think in Pounds & Pence (except for when British Postal Orders are sold at the B.F.P.O.s).They think in Euros & Euro-Cents.

Here's proof; http://www.efipogs.com .

Aidan.

Galapagos

Yes, you're right. It uses the UK pound. That's because it's really just a work station. Nobody lives there permanently. They get sent there on duty.

Galapagos

#24
Guernsey has its own legal tender banknotes and coins, but I have noticed that Alderney produces NCLT coin issues. Why is this?

From Wikipedia:

"The Bailiwick of Guernsey includes the island of Guernsey, the island of Sark, the island of Alderney, Herm and the other islands. The parliament is the States of Guernsey.

Within the Bailiwick of Guernsey, autonomy is exercised by Sark, a feudal (but democratising) state under the Seigneur, whose legislature is called the Chief Pleas, and by Alderney, whose legislature is also called the States, under an elected President."

So, Alderney and Sark have autonomy. They could presumably each issue their own currency and legal tender. This would of course be expensive and impractical, but it explains why Alderney has the right to produce NCLT issues. Maybe we will eventually see Sark doing the same. Guernsey's other dependency, tiny but beautiful Herm, has no such autonomy, however.

Herm did have its own local note - a 1 Pound dated 1958 that was issued by Major Wood, the then Tenant of Herm. Herm's population is even smaller than Sark's. Herm: around 60 inhabitants, as against approximately 600 on Sark. I walked, briskly, around the perimeter of Herm in not much more than 20 minutes. For Sark I took the horse and cart.