The question I am trying to get to the bottom of, is, 'are there any other countries in the world with the same banking system as Scotland's'? I did some research via Google which didn't provide anything of any value. So I hopped on to ChatGPT to ask it, and when I have done this previously, it has always resulted in further enquiries and more questions for more answers.
If you have read the previous three parts (Part I, Part II, Part III) you will know that there were several queries based on the other two suggestions to the question I asked - which were Hong Kong and Macau. Neither are countries and neither have the same banking system as Scotland. The third country it provided was Northern Ireland. Before I share the output from my ChatGPT information, Northern Ireland is often labelled as a province or region, and it has never been an independent country as Scotland has, so if we take my question to the nitty gritty, then ChatGPT has once again offered up an example that is not in line with the very basics of what I asked for. However, there does seem to be similarities of Ireland's banking history and Northern Ireland's banking history, which is a discussion for another journal entry!
Today, I'd like to share what I asked ChatGPT and the follow up answers it provided in relation to the original query.
"I offered Northern Ireland as a comparison to Scotland because both regions share a rare and distinctive feature within the UK banking system: private issuance of banknotes by retail banks. This similarity makes Northern Ireland closer to Scotland's system than other global examples, such as Hong Kong or Macau. However, while the operational mechanics of banknote issuance are similar, the historical and contextual differences between the two regions are significant.
Key Similarities Between Northern Ireland and Scotland
Private Banknote Issuance:
In both Northern Ireland and Scotland, specific banks are authorized to issue their own notes, which are denominated in Pound Sterling (GBP). This is unusual globally, as most countries reserve currency issuance for central banks.
Regulation by the Bank of England:
Northern Irish and Scottish banknotes are regulated under UK law. The Bank of England ensures that all issued notes are fully backed by secure assets such as BoE deposits or high-quality government securities.
Design and Cultural Identity:
Both regions use their note designs to reflect local culture and heritage, which reinforces regional identity while remaining part of the UK monetary system.
Key Differences Between Northern Ireland and Scotland
Historical Background:
Scotland's system of private banknote issuance originates from its pre-Union sovereignty and the independence of its banking system before 1707.
Northern Ireland’s system evolved from the pre-partition Irish banking system, which continued in Northern Ireland after 1921 when the rest of Ireland gained independence.
Political and Cultural Significance:
In Scotland, the issuance of distinct banknotes has symbolic value, reflecting its historical autonomy and identity within the UK.
In Northern Ireland, while the notes feature local imagery, they do not carry the same symbolic political weight.
Why Northern Ireland Is a Closer Comparison
While Northern Ireland's historical context differs from Scotland's, the mechanics of their banking systems—specifically private retail banks issuing Sterling banknotes under Bank of England oversight—are nearly identical. This operational similarity is why I suggested Northern Ireland as the most relevant example.
If we move beyond this shared operational framework, the deeper historical and political contexts indeed set the two systems apart, making Northern Ireland's banking system not entirely "the same" as Scotland's, but functionally the closest comparison within the UK."
My Conclusion?
No further questions your honour! Well, not in relation to the similarities of Scotland's banking system. But I did wonder what it would say if I asked how many people in Scotland and NI would know about how the banking system operates in general. So I asked and this is what it said...
"The level of awareness among the general populations of Scotland and Northern Ireland about the intricacies of their banknotes—such as the fiat currency status, the "not legal tender but legal currency" distinction, and the regulatory oversight of the Bank of England (BoE)—is likely quite low. These are highly technical aspects of the monetary system that are not widely discussed or understood outside financial, academic, or policymaking circles.
Why Awareness May Be Limited
Specialized Knowledge:
The details you mention, such as the backing requirement for Scottish and Northern Irish notes by the Bank of England and the legal status of these notes, are part of a broader understanding of monetary policy and banking regulation, which the average person does not engage with in depth.
Focus on Practical Usage:
Most people are primarily concerned with whether their money is accepted when making purchases. In Scotland and Northern Ireland, local banknotes are widely accepted, and questions about their legal or fiat status rarely arise.
Complex Terminology:
Concepts like "fiat currency," "legal tender," and "backing assets" are complex and often misunderstood. For instance:
Many believe "legal tender" means a note must be accepted everywhere, though in practice it refers to the legal settlement of debts. [JS Notes: this is a HUGELY important point when thinking about the settlement of a debt - if we do not have 'legal tender', how can we settle debts? We are paying debts with a debt!]
The distinction between notes issued by Scottish/Northern Irish banks and those issued by the Bank of England isn't obvious in everyday transactions.
Lack of Public Education:
There is no widespread educational effort to explain how Scotland and Northern Ireland's banknote systems work or how the Bank of England regulates them. This leaves the topic confined to experts or those who actively research it.
What Do People Typically Know?
In Scotland:
Many are aware that their banknotes are distinct from those in England and feature designs unique to Scotland.
Some may know that Scottish notes are sometimes not accepted in other parts of the UK, sparking occasional frustration.
Knowledge of the Bank of England's role in regulating how much Scottish banks can issue is likely limited to those with financial expertise.
In Northern Ireland:
Similar to Scotland, people recognize that their notes are distinct and feature local imagery.
There may be some awareness that Northern Irish notes are not as widely accepted in the rest of the UK.
Understanding of the Bank of England's regulatory role is likely even lower than in Scotland, given less public discourse on the issue.
Is This Lack of Awareness Significant?
For most people, this lack of detailed knowledge is not practically significant, as the system functions smoothly in their day-to-day lives. However, it does mean:
Reduced public scrutiny: The broader implications of central oversight by the Bank of England, especially for those in Scotland and Northern Ireland who value regional autonomy, may go unnoticed or underappreciated.
Misunderstandings about currency: Situations like the rejection of Scottish or Northern Irish notes in England can lead to frustration and confusion, partly because the public is unaware of the "not legal tender but legal currency" distinction.
Final Thoughts
The knowledge gap on these issues likely reflects the technical nature of monetary policy and banking systems, which are rarely part of mainstream education or discourse. [JS Notes: I wanted to highlight this point!] Efforts to improve understanding—perhaps through public education campaigns, financial literacy programs, or media coverage—could help people in Scotland and Northern Ireland appreciate how their monetary systems function and the implications of Bank of England oversight."
That final point is what I am hoping to contribute to from my tiny corner of the interweb! And hopefully just by reading my small four part series of journal entries exploring my question about Scotland having the same banking system as any other country, it may even help contribute. The fiat currency conversation is certainly on the rise and in order for a nation to be sovereign, self-actualising, or financially independent and astute, this information must be known by the majority, not a minority. I believe we are on a path to greater things. I pray daily that we are.
To peace and prosperity,
Jacqs
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