ARTICLE
It’s a moment of confusion and loathing that most of us have
experienced. You’re in a shop. It’s time to pay. You reach for your
purse or wallet and take out your last note. Something about it doesn’t
feel quite right. It’s the wrong shape or the wrong colour and the
design is odd too and the note just doesn’t seem right and . . . By now
you’ve realised: oh shit! It’s the dreaded Scottish banknote!
Tentatively, shyly – or briskly, brazenly, according to character – you
proffer the note. One of three things then happens. If you’re lucky,
the tradesperson takes the note without demur. Unusual, but it does
sometimes happen. If you’re less lucky, he or she takes the note with
all the good grace of someone accepting delivery of a four-week-dead
haddock. If you’re less lucky still, he or she will flatly refuse your
money. And here’s the really annoying part: he or she would be well
within his or her rights, because Scottish banknotes are not legal
tender. ‘Legal tender’ is defined as any financial instrument which
cannot be refused in settlement of a debt. Bank of England notes are
legal tender in England and Wales, and Bank of England coins are legal
tender throughout the UK, but no paper currency is. The bizarre fact of
the matter is that Scottish banknotes are promissory notes, with the
same legal status as cheques and debit cards.
...
During the weekend of 11-12 October last year, the point when the
British banking system teetered on the edge of collapse (‘the only time
in my career,’ a senior banker told me, ‘when I’ve felt genuinely
frightened’), RBS was in receipt of an emergency injection of
government cash, to the tune of £20 billion. This left us, the
taxpayers, owning about 60 per cent of the collapsing bank. On 26
February this year, RBS gave a preliminary announcement of its annual
results. The bank had lost £24 billion, the largest loss in British
corporate history, and required yet more government money to stay
solvent. The new government money, £25.5 billion, took the taxpayer’s
share of the bank to around 95 per cent. In addition, RBS put £302
billion of its assets into the government’s Asset Protection Scheme, a
sort of insurance plan under which the government, in return for a fee,
promises to underwrite future losses from the toxic assets (these
assets used to be worth £325 billion but their value has already been
written down).