British pound

Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. The pound ( sign: £) is the main unit of sterling, and the word "pound" is also used to refer to the British currency generally, often qualified in international contexts as the British pound or the pound sterling.

Sterling is the world's oldest currency that is still in use and that has been in continuous use since its inception. It is currently the fourth most-traded currency in the foreign exchange market, after the United States dollar, the euro, and the Japanese yen. Together with those three currencies and Renminbi, it forms the basket of currencies which calculate the value of IMF special drawing rights. As of mid-2021, sterling is also the fourth most-held reserve currency in global reserves.

The Bank of England is the central bank for sterling, issuing its own banknotes, and regulating issuance of banknotes by private banks in Scotland and Northern Ireland. Sterling banknotes issued by other jurisdictions are not regulated by the Bank of England; their governments guarantee convertibility at par. Historically, sterling was also used to varying degrees by the colonies and territories of the British Empire.

Names

"Sterling" is the name of the currency as a whole while "pound" and "penny" are the units of account. This is analogous to the distinction between "renminbi" and " yuan" when discussing the official currency of the People's Republic of China.

Etymology

There are various theories regarding the origin of the word "sterling". ''The Oxford English Dictionary'' states that the "most plausible" etymology is a derivation from the Old English ''steorra'' for "star" with the added diminutive suffix "-ling", to yield "little star". The reference is to the silver penny used in Norman England in the twelfth century, which bore a small star.

Another argument, according to which the Hanseatic League was the origin of both its definition and manufacture as well as its name is that the German name for the Baltic is "Ostsee", or "East Sea", and from this the Baltic merchants were called "Osterlings", or "Easterlings". In 1260, Henry III granted them a charter of protection and land for their Kontor, the Steelyard of London, which by the 1340s was also called "Easterlings Hall", or Esterlingeshalle. Because the League's money was not frequently debased like that of England, English traders stipulated to be paid in pounds of the "Easterlings", which was contracted to "'sterling". The OED dismisses this theory as unlikely, since the stressed first syllable would not have been elided.

Encyclopædia Britannica states the (pre-Norman) Anglo-Saxon kingdoms had silver coins called "sterlings" and that the compound noun "pound sterling" was derived from a pound (weight) of these sterlings.

Symbol

The currency sign for the pound unit of sterling is , which (depending on typeface) may be drawn with one or two bars: the Bank of England has exclusively used the single bar variant since 1975. ("£1 1st Series Treasury Issue" to "£5 Series B") Historically, a simple capital (in the historic black-letter typeface, $\mathfrak$) placed before the numerals, or an italic ''l.'' after them, was used in newspapers, books and letters. The Royal Mint was still using this style of notation as late as 1939. The glyphs and may occasionally be encountered. Use of the letter for pound derives from medieval Latin documents: "L" was the abbreviation for , the Roman pound (weight), which in time became an English unit of weight defined as the tower pound. A "pound sterling" was literally a tower pound (weight) of sterling silver. In the British pre-decimal (duodecimal) currency system, the term £sd (or Lsd) for pounds, shillings and pence referred to the Roman , ''solidus'', and ''denarius''.

Notable style guides recommend that the pound sign be used without any abbreviation or qualification to indicate sterling (e.g., £12,000). Notations with a more explicit sterling abbreviation such as ''£ ..nbsp;stg.'' (e.g., £12,000 stg.), ''£stg.'' (e.g., ), ''stg'' or ''STG'' (e.g., Stg. 12,000 or STG 12,000), or the ISO 4217 code ''GBP'' (e.g., 12,000 GBP) may be seen, but are not usually used unless disambiguation is absolutely necessary.

Currency code

The ISO 4217 currency code for sterling is "GBP", formed from the ISO 3166-1 alpha-2 code for the United Kingdom, "GB", and the first letter of "pound". Banking and finance often use the abbreviation ''stg'' or the pseudo-ISO code '' STG''. The Crown Dependencies use their own abbreviations which are not ISO codes but may be used like them: GGP (Guernsey pound), JEP (Jersey pound) and IMP (Isle of Man pound). Stock prices are often quoted in pence, so traders may refer to penny sterling, GBX (sometimes GBp), when listing stock prices.

Cable

The exchange rate of sterling against the US dollar is referred to as "cable" in the wholesale foreign exchange markets. The origins of this term are attributed to the fact that from the mid-19th century, the sterling/dollar exchange rate was transmitted via transatlantic cable.

Slang terms

Historically almost every British coin had a widely recognised nickname, such as "tanner" for the sixpence and "bob" for the shilling. Since decimalisation these have mostly fallen out of use except as parts of proverbs.

A common slang term for the pound unit is ''quid'' (singular and plural, except in the common phrase "quids in!"). The term may have come via Italian immigrants from " scudo", the name for a number of currency units used in Italy until the 19th century; or from Latin 'quid' via the common phrase ''quid pro quo'', literally, "what for what", or, figuratively, "An equal exchange or substitution". The term "nicker" (also singular and plural) may also refer to the pound.

Crown Dependencies and British Overseas Territories

The currency of all the Crown Dependencies and most British Overseas Territories is either sterling or is pegged to sterling at par. These are Jersey, Guernsey, the Isle of Man, the Falkland Islands, Gibraltar, South Georgia and the South Sandwich Islands, Saint Helena and the British Antarctic Territory, and Tristan da Cunha.

Some British Overseas Territories have a local currency that is pegged to the U.S. dollar or the New Zealand dollar. The Sovereign Base Areas of Akrotiri and Dhekelia (in Cyprus) use the euro.

Subdivisions and other units

Decimal coinage

Since decimalisation on Decimal Day in 1971, the pound has been divided into 100 pence (denoted on coinage, until 1981, as "new pence"). The symbol for the penny is "p"; hence an amount such as 50p (£0.50) properly pronounced "fifty pence" is often pronounced "fifty pee" /fɪfti piː/. The old sign ''d'' was not reused for the ''new penny'' in order to avoid confusion between the two units. A decimal halfpenny (p, worth 1.2 old pennies) was issued until 1984 but was withdrawn due to inflation.

Pre-decimal

Before decimalisation in 1971, the pound was divided into 20 shillings, and each shilling into 12 pence, making 240 pence to the pound. The symbol for the shilling was "''s''." not from the first letter of "shilling", but from the Latin ''solidus''. The symbol for the penny was "''d''.", from the French ''denier'', from the Latin ''denarius'' (the solidus and denarius were Roman coins). A mixed sum of shillings and pence, such as 3 shillings and 6 pence, was written as "3/6" or "3''s''. 6''d''." and spoken as "three and six" or "three and sixpence" except for "1/1", "2/1" etc., which were spoken as "one and a penny", "two and a penny", etc. 5 shillings, for example, was written as "5''s''." or, more commonly, "5/–" (five shillings, no pence).
Various coin denominations had, and in some cases continue to have, special names, such as florin (2/–), crown (5/–), half crown (2/6''d''), farthing (''d''), sovereign (£1) and guinea (''q.v.''). See Coins of the pound sterling and List of British coins and banknotes for details.

By the 1950s, coins of Kings George III, George IV and William IV had disappeared from circulation, but coins (at least the penny) bearing the head of every British monarch from Queen Victoria onwards could be found in circulation. Silver coins were replaced by those in cupro-nickel in 1947, and by the 1960s the silver coins were rarely seen. Silver/cupro-nickel shillings (from any period after 1816) and florins (2 shillings) remained legal tender after decimalisation (as 5p and 10p respectively) until 1990 and 1993 respectively, but are now officially demonetised.

History (600 to 1945)

The pound sterling emerged after the adoption of the Carolingian monetary system

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