Bank of England Notes: What Gives The Pound Sterling Value?

bank of england notes

Here in this post I will discuss Bank of England Notes and what really gives the Great British pound Value? In Today’s modern world, is money really money anymore? Or does it merely represent digits on a screen?

What Is Money? 

I have answered this question before on another post,  See What is Money and Why Do We Use It for a simple explanation on this subject. Put it this way though, money is a tool that we need in our everyday lives. Zig Ziglar said “It ranks pretty high up there with oxygen, you can’t live without it.”

So What Gives Bank of England Notes Their Value?

The Bank of England has been issuing banknotes for over 300 years. During that time, both the notes themselves and their role in society have undergone continual change. From today’s perspective, it is commonly accepted that a note that costs a few pence to produce is worth five, ten, twenty or fifty pounds.

Maintaining confidence in the currency is a key role of the Bank of England and one which is essential to the proper functioning of the economy.

Banknotes were initially IOUs for gold deposited at the Bank. People used these notes to pay for things, knowing they
were backed by ‘The Promise’ to pay the equivalent value in gold.

That’s no longer possible. So what gives modern banknotes their face value, when they cost only a few pence to make?

In a word, TRUST!

We trust that banknotes can be exchanged for the things we want to buy. We trust ‘The Promise’ that they will be accepted by others for their face value. This trust gives banknotes their value.

So with that in mind. If money today whatever form it is in digital or paper what happens when that trust has been broken or completely gone? Money is suppose to be a store of value, unit of account and a medium of exchange. How can we continue with a monetary system which erodes the store of value by either printing more paper or creating more digits on a screen?

I will leave with you that thought to ponder over, not for too long I hope though or you might miss the boat! For those of you who have had that uh huh moment and the penny has dropped already are now probably wondering “Now what?”

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So there you have it, I hope you got value! From this post on Bank of England Notes?  If so, I would greatly appreciate if you commented below with your thoughts and shared on social media. Also remember to subscribe to keep updated on my latest content.

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