Culture of Scotland: Encyclopedia II - Culture of Scotland - Banking and currency

Culture of Scotland - Banking and currency

, see also Category:Economy of Scotland.

Banking in Scotland also features unique characteristics. Although the Bank of England remains the central bank for the UK Government, three Scottish corporate banks still issue their own banknotes: (the Bank of Scotland, the Royal Bank of Scotland and the Clydesdale Bank). These notes have no status as legal tender in England, Wales or Northern Ireland (although they can be used throughout the UK, particularly in Northern Ireland, where Irish banks also issue their own banknotes, and they are also freely accepted in the Channel Islands). In Scotland, neither they nor the Bank of England's notes rank as legal tender (as Scots law lacks the concept), however banknotes issued by any of the four banks meet with common acceptance. See British banknotes.

For a further discussion read Legal Tender

The modern system of branch banking (in which banks maintain a nationwide system of offices rather than one or two central offices) originated in Scotland. Only strong political pressure during the 19th century prevented the resultant strong banking system from taking over banking in England. However, although Scottish banks proved unwelcome in England at the time, their business model became widely copied, firstly in England and later in the rest of the world. This is not to say that the Scottish banking system was immune from crises - especially the collapse of the City of Glasgow Bank in 1878.

The Savings Bank movement was created in Scotland in 1810 by the Reverend Henry Duncan as a means of allowing his parishioners to save smaller amounts of money than the major banks would accept as deposits at that time. His model for the Ruthwell Parish Bank was adopted by well-to-do sponsors throughout the world. The American examples eventually became Savings and Loan Associations and most of the British savings banks amalgamating to form the Trustee Savings Bank, which recently merged with the commercial bank, Lloyds Bank, to form Lloyds TSB. However the Airdrie Savings Bank maintained its position outside this process.

Scotland also developed a number of powerful Life Assurance companies during the 19th and 20th centuries. These were predominantly managed on the mutual model, offering with-profits investment as well as protection business. Financial pressures since the 1980s have led to their demutualisations and most are now part of larger financial institutions.

See [2] for further information on the history of Scottish banking.

Adapted from the Wikipedia article "Banking and currency", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki