Tuesday, July 13, 2010

Interesting read on Banknotes

During my recent trip, I came into contact with five different currencies (six, if Ringgit Malaysia is included). It's interesting when you actually sit down and scrutinise the banknotes and coins of different countries. The fine prints, watermarks, illustrations and symbols used all carry some sort of significance. I was particularly fascinated by the English and Scottish pounds sterling - Why use two different banknotes when both are of equal value and both are from the same country? The reason is because the issue of banknotes are not handled exclusively by the central bank, such as in Malaysia. Instead, in the UK, there are seven other retail banks which are allowed to print their own banknotes besides the central bank - Bank of England. From my observation, two of the seven retail banks are Royal Bank of Scotland and Clydesdale Bank.

Another silly thing that kept turning in my mind after reading/seeing everything there was to read/see on the Scottish pounds sterling banknotes was this statement:

The Royal Bank of Scotland plc 

Doesn't it mean that the banknote is just a note or a piece of paper representing a debt value that is collectible or redeemable from the bank? Next question: In what form is this debt value redeemable? Gold - since it is seen as a rare precious metal with a high stable value? Well, after reading more about 'legal tender' on the Wiki page, the answer is "bank notes are no longer redeemable in gold and the Bank of England will only redeem sterling banknotes for more sterling banknotes or coins." Which means, that once upon a time, banknotes actually carried a tangible value that we could get our hands on by exchanging the notes for gold from the bank. Now, it's just a piece of paper where we can only get more papers (in smaller denomination) and no gold! It is backed by 'securities' - and isn't that just another broad term for a bunch of papers/IOUs representing something intangible - that you can't get your hands on physically?

Anyway, the world keeps going round and you and I have bank account books with printed amounts of paper money we own in them. As long as these paper notes are good to buy me lunch, I'm happy!

Paying the cashier with foreign coins has always been a challenge for me. Some countries have coins sizes which don't match the value (at least in my mind's rationale - based on being too used to Malaysian coin sizes). What I mean is... like why is the US one dime coin (10 cents) smaller than the five cent coin? Or why is a British two pence coin bigger than a five pence or even a one penny coin? Well, after a week or so (in each country), I made a point of memorising the coins so that I don't look like a fool emptying her purse at the cashier!

One of the nights in CL's, I went through my British coins and noticed that the picture on the back of the one and two pound coins varied. That spurred me to check the other smaller denomination coins and I noticed the newer coins had a 'cut-off' design of some sort of emblem. I didn't think too much of it, just thought that perhaps it's some modern artistic interpretation of a coat of arms or something. Well, lookie here.... look what I found on Google Image search!

Interesting eh? I took a couple of photos of the different one pound coins I kept, but upon reviewing them, they kind of look dirty - so I won't upload them here. Haha

In one of our purchases, mum was refunded in £10 notes and one of them had a tear at its corner. Later on we had a little trouble trying to spend it, but in the end we managed to get rid of it. This situation reminded me of the many times at home when we went grocery shopping in the Giant hypermarkets. The cashiers were very careful not to accept torn (even slightly) notes and would advice their customers to change it at a bank (like we have nothing else better to do than line up at a bank!). I've always wondered on what conditions would the bank accept a damaged banknote and would a commercial bank actually be willing to render the service of that exchange for free? After all, the banknotes were distributed by the central bank (Bank Negara). This article helped clear some questions I had on my mind about this issue.

To sum it up:
If your banknotes appear to be accidentally damaged, you can return them to Bank Negara in replacement for new notes, but, if the damaged notes are less than 2/3 its original size, you will not be able to get a replacement in its full value (i.e. replacement value will depend on the size of the remnant of the damaged note). If the banknotes have been drawn/written on on purpose, don't even plan on getting back your money!

On a different topic altogether, I was quite thrilled to see lone and even clusters of wind turbines on fields when we were travelling in the UK. Honestly I've never actually seen one with my very own eyes and this was the first time I've set my eyes on wind turbines! They look so (modern, nice, stylish) and they're green technology! Anyway, I digress. The point is, I was wondering why they were scattered all over the farmland in the country (or at least at the places we visited - Liverpool, Manchester, Scotland) and I found the answer in the newspaper - Britain is the world leader in developing renewable wind energy!

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