Scotland and Northern Ireland
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Scottish and Northern Irish banknotes are unusual, firstly because they are issued by retail banks, not central banks, and secondly, as they are not legal tender anywhere in the UK – not even in Scotland or Northern Ireland – they are in fact promissory notes. Indeed, no banknotes (even Bank of England notes) are now legal tender in Scotland or Northern Ireland.[28][14]
Seven retail banks have the authority of Parliament to issue sterling banknotes as currency.[29] Despite this, the notes are sometimes refused in England and Wales, and are not always accepted by banks and exchange bureaus outside of the United Kingdom. This is particularly true in the case of the Royal Bank of Scotland £1 note, which is the only £1 note to remain in circulation within the UK.[30]
In 2000, the European Central Bank indicated that, should the United Kingdom join the euro, Scottish banks (and, by extension, Northern Ireland banks) would have to cease banknote issue.[31] During the Financial crisis of 2007–2008, the future of private banknotes in the United Kingdom was uncertain. It has been suggested that the Banking Act 2009[32] would restrict the issue of banknotes by commercial banks in Scotland and Northern Ireland by removing many of the provisions of the Acts quoted above.[33] Banks would be forced to lodge sterling funds with the Bank of England to cover private note issue for a full week, rather than over a weekend, thereby losing four days' interest and making banknote production financially unviable. Following negotiations among the UK Treasury, the Bank of England and the Scottish banks, it was agreed that the funds would earn interest, allowing them to continue to issue their own notes.[34]