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Home > Banknotes > Frequently Asked Questions

Frequently Asked Questions

Follow the links below to see our most frequently asked questions on the following topics.

Questions about polymer banknotes and the new £10 note

Which banknotes are changing?
The Bank of England issued a new polymer £5 note on 13 September 2016. A new polymer £10 note was issued on 14 September 2017, and a new polymer £20 note will be issued in 2020. The Bank of England will make a decision on when to issue a new £50 note, and whether to print it on polymer, in due course. 

More information on the new polymer £10 note can be found on
When can I expect to first see a new polymer £10 note?
The new polymer £10 notes entered circulation on 14 September 2017 and the public will start to see the notes in the following days and weeks.  Around 70,000 ATMs dispense £10 notes and most are expected to switch to dispensing the new notes over the first month.
Find out more about the new £10 at The New Ten website.

How long can I continue to use paper £10 notes?
You can continue to use the paper £10 note until its legal tender status is withdrawn in Spring 2018. Notice will be given at least 3 months prior to the withdrawal date.
Can I get a low serial numbered note?
The Bank of England has donated some notes with significant or low serial numbers to people or institutions that were involved in the development of the note or who traditionally receive a note when a new series is issued – for example the Queen receives AA01 000001. 

The Bank also held a charity low numbered banknote auction at Spink and Son on 3 October 2016 and raised £194,500 for the Bank’s nominated charities of
the year (The Lily Foundation and The Myotubular Trust) and a third charity which was nominated by our Notes Directorate (Bliss). The Bank will hold a charity auction for low and lucky numbered polymer £10 note. For more information go to

Who were the low numbered polymer £10 notes allocated to following the issue on 14 Sept 2017?
Note ​ ​Recipient
AA01 000001​ ​Her Majesty The Queen
​AA01 000002 ​Prince Phillip
​AA01 000003 ​Prime Minister
​​AA01 000004 ​​Philip Hammond (as Chancellor)
​AA01 000005 ​Mark Carney (as Governor)
​AA01 000006 ​​Ben Broadbent (As Deputy Governor responsible for Notes)
​AA01 000007 ​Victoria Cleland (as Chief Cashier)
​​AA01 000008 ​Bank of England Museum
​​AA01 000009 ​British Museum
​AA01 000012 ​Anthony Habgood (as Chair of the Bank’s Court)
​AA01 000013 ​De La Rue
​AA01 000015 ​CCL Secure
​AA01 000016 ​Royal Mint
​AA01 001809 ​Chawton House Library
​AA01 001817 ​Winchester Cathedral
​AA01 001775 ​Jane Austen Museum- Bath
​AA01 001868 ​RNIB
​AA01 001949 ​Jane Austen's House Museum

What is polymer?
Polymer is made from polypropylene and is a durable yet thin and flexible plastic film. It can be coated with layers of special ink that enables it to carry the printed design features of banknotes. The material allows the inclusion of ‘windows’ or clear portions in the design, which enhance protection against counterfeiters. Polymer is also better able to repel dirt so notes stay cleaner for longer.
Why did the Bank decide to move to polymer?
The Bank of England decided to move to polymer notes because they are cleaner, safer and stronger than paper notes.  Polymer notes provide enhanced counterfeit resilience and increase the quality of notes in circulation.  And, because they last around 2.5 times longer than paper notes, polymer notes are also more environmentally friendly.
What was the purpose of the public consultation programme?
Given that banknotes play a role in everyone’s day to day lives, the Bank undertook a public consultation programme in 2013 before deciding whether or not to print its banknotes on polymer. As part of this programme we attended nearly 50 events across the United Kingdom, in order to give the public an opportunity to learn more about polymer banknotes and provide feedback before we made our final decision. Public acceptability was important and we needed to factor this into our decision.
Have you discussed the move to polymer with the cash industry?
The Bank of England hosts bi-annual industry-wide forums, focussed on the move to polymer which are attended by over 90 key organisations, including financial institutions, ATM operators, cash-in-transit companies, banknote equipment manufacturers, retailers, and trade associations.
The Bank also supports five industry working groups that focus on: the readiness of the wholesale cash sector; upgrades for ATMs; upgrades for other cash handling machines; theft deterrent solutions; and awareness and training for staff who handle cash. A steering group brings together the Chairs of each working group to review progress, and ensure that key developments are effectively communicated.
Which other countries use polymer banknotes?
Over 30 countries currently issue polymer notes. These include Australia (who introduced them in 1988), New Zealand, Mexico, Singapore, Canada and Fiji.
What have you found out about other countries’ experiences of polymer notes?
As part of our analysis we consulted with a number of countries – covering the spectrum of those who have moved to polymer, those who ceased to issue on polymer and those who have decided not to use polymer at this stage. The message from other polymer issuers is favourable in terms of counterfeit resilience. They have also reported improved note life and quality compared with paper.  
Where are polymer banknotes printed?
The polymer substrate used for the £5 and £10 is produced by CCL Securities who have a plant in Wigton, Cumbria.  In line with the Bank’s current note printing and production, they will be printed by De La Rue at the Bank’s print works in Essex.
Will polymer Bank of England banknotes retain the traditional look?
Yes. They will retain the traditional design of our existing notes. This will include a portrait of Her Majesty the Queen on the front and historic characters on the back.
Why are you changing the size of banknotes?
The new polymer notes will be about 15% smaller than their paper equivalents. Bank of England banknotes are large by international standards. Smaller notes mean less material will be used in production. This will reduce manufacturing costs and deliver environmental benefits. There are also some savings to the costs of storing and transporting banknotes. The Bank of England has changed the size of its notes a number of times, most recently between 1990 and 1994.
Can I use polymer banknotes in the same way as paper banknotes?
Yes, polymer notes can be used in the same way as paper notes. For example, polymer notes will be available from ATMs, accepted by retailers and businesses and can be folded into wallets.
Will there be a smooth transition to the introduction of the polymer £10 note?
Yes. The Bank has carried out a full education and publicity programme to help ensure that retailers, businesses and the general public are fully aware of what the new £10 note looks like and how to authenticate it. The Bank has also worked closely with the manufacturers of machines that accept and dispense notes to ensure that there is a smooth transition to polymer.
Are polymer notes counterfeit proof?
No banknote is counterfeit proof. The question is how difficult it is to counterfeit effectively. The techniques required to produce high quality counterfeit polymer banknotes are slow, expensive and require a high level of effort and technical expertise.  This presents a significant barrier to counterfeiters.
Can polymer banknotes be folded?
Yes. Polymer notes are as thin and flexible as paper notes, and can be easily folded, to fit into wallets and purses.
Are polymer banknotes slippery?
Polymer notes can feel slippery when new; although this tends to decline over time once the notes are in circulation.  Polymer notes will also have areas of raised print which will give them a tactile quality and reduce the slippery feel.
Do polymer notes stick together?
Brand new polymer notes can sometimes stick together, as do brand new paper notes, but this effect is short-lived once in use.  New notes can be fanned or tapped on a desktop surface to make them easier to count by hand or machine.
Do polymer notes melt at high temperatures?
No banknote substrate (material) is indestructible. Polymer banknotes begin to shrink and melt at temperatures above 120°, so they can be damaged by an iron for example.
Do polymer banknotes carry germs?
Banknotes, like any other surface that large numbers of people come into contact with, can carry bacteria. However, the risks posed by handling a polymer banknote are no greater than those posed by touching any other common surface, like handrails, doorknobs or credit cards.
How will blind and vision impaired people be able to denominate the new banknotes?
On the front of the £10 polymer note (the side with raised print), there are two clusters of raised dots in the top left hand corner. This tactile feature helps blind and partially sighted people identify the value of the note. 
The polymer £20 will also have a tactile feature, but with a different pattern. The polymer £5 will be identifiable as the only polymer note without a tactile feature.
Additionally, the new polymer notes will have the same features as the paper notes: the notes retain tiered sizing and include bold numerals and similar colour palettes to the current notes.
What are the environmental impacts of polymer notes?
As part of its research reviewing the relative merits of printing notes on polymer compared with cotton-paper, and in line with its commitment to environmental sustainability, the Bank commissioned an independent comparative environmental impact study in 2013. In this study, polymer showed benefits over cotton-paper for all the main phases of its life cycle. For the majority (six from seven) of the indicators covered by the study, it was shown that polymer notes have a lower environmental impact than cotton-paper notes.
This original study was conducted prior to the Bank of England switching to polymer, and used projections to estimate the impact of printing polymer bank notes as opposed to actual production data. The Bank thus decided to establish with certainty the carbon reduction benefits of polymer £5 and £10 looking at the full life cycle of greenhouse gas emissions, including from their production, use in circulation and final disposal. This process involved a carbon footprint assessment by ThinkStep. The assessment further confirmed that both £5 and £10 polymer bank notes outperform paper banknotes.
For the purposes of both studies, polymer notes were conservatively judged to last 2.5 times longer than cotton-paper notes and this is the main factor leading to their strong environmental performance. This is mainly due to the reduced environmental burdens associated with raw material production and processing of new notes to replace unfit ones.
The results of the carbon footprint assessment were independently verified and certified by the Carbon Trust. This certification was completed in accordance to the PAS 2050 standard, which is an internationally recognised method for quantifying the carbon footprint of products. The Carbon Trust has certified that over their full life cycle, the carbon footprint of a £5 polymer banknote is 16% lower than the £5 paper banknote, while the carbon footprint of a £10 polymer banknote is 8% lower than the £10 paper banknote.

What is the Carbon Trust’s Footprint Label?
£5 and £10 polymer banknotes have been awarded the Carbon Trust’s Footprint Label for carbon footprint reduction. The label demonstrates that the Bank has accurately measured the carbon footprint of these denominations, and that over their full life cycle they will deliver carbon reduction benefits (see above for detail).
How will the waste from old paper and polymer banknotes be managed?
The majority of old paper notes are already recycled using a composting treatment (as used in the treatment of food waste). From 2011, the majority of the Bank’s paper note waste has been recycled in this way and used as a soil improver for agriculture although we are now exploring other options given changes in the industry. As composting is not suitable for polymer notes, the Bank commissioned an independent third party to conduct a Life Cycle Assessment study to assess the environmental impacts of different waste treatment options. The study was conducted using the international standards ISO 14040:2006 and 14044:2006 for Life Cycle Assessment, and externally reviewed by a panel of industry experts. Recycling proved to be the most favourable option as it comes with the lowest impacts for all the environmental impact indicators considered. As a result the Bank has secured a UK based recycling solution, for polymer notes to be turned into pellets before being transformed into new plastic items such as plant pots.

Animal-derived products in polymer banknotes

Do polymer banknotes contain animal derived products?
On 30 November 2016, the Bank issued a public statement confirming that it had recently become aware of the presence of a trace of animal-derived product in our £5 polymer note. Investigations found that an extremely small amount of an animal-derived additive is used in an early stage of the production process of the polymer pellets, which are then used to create the base substrate for the £5 and £10 notes.

The Bank was not aware of this issue when the contract was signed for the supply of our polymer for £5 and £10 notes.

What has the Bank done in response to people’s concerns?
As detailed in the statement on 15 February, the Bank concluded that it would be appropriate to keep the £5 polymer note in circulation and to issue the £10 polymer note as planned, in September. In reaching its decision, the Bank gave careful consideration to the possible alternative options for the Churchill £5 note and the Jane Austen £10 polymer note.  In doing so, the Bank considered: its responsibility to issue and maintain the supply of high quality and secure banknotes, its obligations under the Equality Act 2010, the concerns raised about the use of animal-derived products, the impact of any changes on firms that process and handle cash, the potential impact on our suppliers, and value for money for the taxpayer. Further information on the Bank’s assessment is presented in the paper published on 15 February.

At the same time, the Bank committed to running a full public consultation on the composition of the polymer for the £20 note and future production runs of the £5 and £10 polymer notes. This consultation ran from 30 March to 12 May 2017. In addition, the Bank has also conducted outreach meetings with representatives of potentially impacted groups, commissioned technical trials, held commercial discussions and commissioned independent environmental research.

The Bank announced on 10 August that after careful and serious consideration there would be no change to the composition of polymer used for future banknotes. The new polymer £20 note and future print runs of £5 and £10 notes will continue to be made from polymer manufactured using trace amounts of chemicals ultimately derived from animal products. .

Why is the Bank continuing to use animal derived additives in banknotes?
This decision reflects multiple considerations including the concerns raised by the public, the availability of environmentally sustainable alternatives, positions of our Central Bank peers, value for money, as well as the widespread use of animal-derived additives in everyday products, including alternative payment methods. In reaching its decision, the Bank has also taken account of its obligations under the Equality Act 2010.

The only currently viable alternative for the manufacture of polymer banknotes is to use chemicals derived from palm oil. In order to seek the public’s views on both these options, the Bank ran a full public consultation which set out a range of relevant information. The Bank has also conducted outreach meetings with representatives of potentially impacted groups, commissioned technical trials, held commercial discussions and commissioned independent environmental research.

3,554 people responded to our consultation. Of those who expressed a preference, 88% were against the use of animal-derived additives and 48% were against the use of palm oil-derived additives. The Bank has had to balance these responses against its other public duties and priorities as well as the other evidence gathered over the past months. The use of palm oil raises questions about environmental sustainability and the Bank’s suppliers have been unable to commit to sourcing the highest level of sustainable palm oil at this time.

Value for money was also a consideration in the Bank’s decision.  The estimated extra cost of switching to palm oil-derived additives has increased since the consultation and is estimated to be around £16.5 million over the next ten years. The Bank has consulted with HM Treasury, as the ultimate bearer of this additional cost is the taxpayer. HM Treasury has advised the Bank that it does not believe switching to palm oil derivatives would achieve value for money for taxpayers.

The Bank fully recognises the concerns raised by members of the public, both prior to and during the consultation, and has not taken this decision lightly.  The Bank also understands that the decision it has reached may disappoint some parties, but in making this decision, the Bank has considered very carefully the relevant factors and taken into consideration all of its objectives, including its responsibility to maintain confidence in the currency through the issuance of high quality, secure banknotes and achieve value for money for taxpayers.   

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Questions about the Banknote Character Selection for the next £20

Who will be on the next £20 note?
Artist J.M.W Turner has been selected to be on the next £20 note.

How was this decided?
Between 19 May and 19 July 2015 the public nominated characters from the field of the visual arts they would like to appear on the next £20 note. The Bank of England received 29,701 nominations covering 590 eligible visual artists. The nominated characters were considered by the Banknote Character Advisory Committee with input from a number of public focus groups. The Committee then provided a shortlist to the Governor of the Bank of England to make the final decision. It was announced on 22 April 2016 that J.M.W Turner would be on the next £20 note, to be introduced into circulation by 2020. 

Banknote Characters 

Questions about the Fry £5 Note Withdrawal

Which £5 note was withdrawn on 5 May 2017?
The Bank of England £5 notes that show a portrait of Elizabeth Fry on the reverse. These notes are sometimes referred to as the £5E series note. The £5 note featuring Sir Winston Churchill on the reverse, first issued in to circulation in September 2016, still has legal tender status and can be used normally.
Where can I exchange paper Fry £5 notes?
The Bank of England will always exchange its old-series notes. Notes may be presented for payment either in person or sent by post (at the sender’s risk) to: Dept NEX, Bank of England, Threadneedle Street, London EC2R 8AH.

How much notice is given before a banknote is to be withdrawn?
Legally the Bank is required to give one month’s notice of an intention to withdraw legal tender status. The paper £10 note will be withdrawn in Spring 2018.  The Bank will give 3 months’ notice prior to the withdrawal date.

What is legal tender? 

How many paper Fry £5 banknotes are still in circulation?
As at end-June 2017, there were approximately 127.2 million paper £5 banknotes still in circulation, worth around £636 million. [In comparison, there were approximately 255.6 million polymer £5 banknotes in circulation, worth around £1.3bn.] 
For those holding these notes, the Bank of England will always exchange its old-series notes. Notes may be presented for payment either in person or sent by post (at the sender’s risk) to: Dept NEX, Bank of England, Threadneedle Street, London EC2R 8AH.
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General questions about banknotes

Are old Bank of England notes worthless?
No; all Bank of England notes retain their face value for all time. If your local bank, building society or Post Office is not willing to accept these notes then they can be exchanged with the Bank of England in London. For more information on how to exchange Bank of England banknotes that have been withdrawn from circulation see the exchanging banknotes page.
What is the Bank’s “Promise to Pay”?
The words "I promise to pay the bearer on demand the sum of five [ten/twenty/fifty] pounds" date from long ago when our notes represented deposits of gold. At that time, a member of the public could exchange one of our banknotes for gold to the same value. For example, a £5 note could be exchanged for five gold coins, called sovereigns. But the value of the pound has not been linked to gold for many years, so the meaning of the promise to pay has changed. Exchange into gold is no longer possible and Bank of England notes can only be exchanged for other Bank of England notes of the same face value. Public trust in the pound is now maintained by the operation of monetary policy, the objective of which is price stability.
What is legal tender?
Legal tender has a very narrow and technical meaning, which relates to settling debts. It means that if you are in debt to someone then you can’t be sued for non-payment if you offer full payment of your debts in legal tender.

What is classed as legal tender varies throughout the UK. In England and Wales, legal tender is Royal Mint coins and Bank of England notes. In Scotland and Northern Ireland only Royal Mint coins are legal tender. Throughout the UK, there are some restrictions when using the lower value coins as legal tender.  For example, 1p and 2p coins only count as legal tender for any amount up to 20p.
For more information see KnowledgeBank 'What is Legal Tender?'
What type of UV lamp should I use to check that a banknote is genuine?
A good quality ultra violet (UV) lamp that emits light at around 365 nanometres is best for checking the ultra-violet features on all notes. The use of LED (Light Emitting Diode) devices (such as key fob type detectors) is not recommended as the majority of these emit light at greater than 365 nanometres.
Retailers are reminded not to just check one security feature but to check a few such as the feel of the paper and the raised print, the watermark and metallic thread. Details on the checks to make can be found in the leaflet “Take a Closer Look” which is available free from the Bank of England.
Can I use a “detector pen” to check that banknotes are genuine?
The pens work by reacting with the starch that is present in 'normal' paper.  So, whilst they can detect some (but not all) counterfeits printed on paper, they won't detect counterfeits that are printed on polymer.  Be careful as old or dirty pens can be unreliable.
How do I check whether a note is genuine or not?
Take your time to check your notes, particularly if light conditions are poor or you are handling a large number of notes.

Never rely on just one security feature; no counterfeit notes successfully copy all of the security features included in Bank of England notes. To read about how to check your banknotes see our counterfeit prevention pages. Alternatively you can download our Banknote App (free to download for both Apple and Android devices).
What should I do if I think I have been given a counterfeit note?
If you think a note that you have is a counterfeit you must take it to the police as soon as you can. They will provide you with a receipt and send the counterfeit to the Bank of England for analysis. If the note is genuine reimbursement will be made in full.

A counterfeit note is completely worthless and it is a criminal offence to hold or to pass on a note which you know to be counterfeit.
Don’t get caught out by the counterfeiter; always check your banknotes.
What can I do if I have a note that has been damaged in some way?
Banknotes get damaged or contaminated in a number of different ways; this doesn’t render the note worthless and the Bank has a small dedicated team based at its cash centre in Leeds that deals with all manner of mutilated notes. Full details of how claims can be made for accidentally damaged notes are contained in the Damaged and Mutilated Notes section of this site.
If you require further information or advice please contact the Bank’s cash centre in Leeds on 0113 236 6826.
Is it illegal to deface a Bank of England banknote?
Under the Currency & Banknotes Act 1928 it is illegal to deface our banknotes (by printing, writing or impressing upon them words, letters or figures, etc.), although the question of whether or not to prosecute in individual cases is up to the police and the courts.
What is on a banknote to help blind and partially sighted people identify the different denominations?
Each denomination is a different size; the greater the value the larger the note. So a £10 note is larger than a £5 note and so on. There is also a densely coloured recognition symbol on the front of the paper £5 and £10 notes that are unique to each denomination - a turquoise circle on the £5, and an orange diamond on the £10. The £5, and £10 notes also have large denomination numerals on the front of the note. The £20 and £50 notes do not require a unique recognition symbol because the denomination numerals are prominently displayed in the clear white area of the notes.
The new polymer notes will have the same features as the paper notes: the notes retain tiered sizing and include bold numerals and similar colour palettes to the current notes.  In addition, polymer £10 and £20 notes will each have a tactile feature created by a series of raised dots, and the £5 note will be distinguishable by the absence of the feature. 
Has the Bank considered using Braille on banknotes to help blind people identify the different denominations?
The Bank is always considering ways to improve our notes for all users. We have investigated Braille but understand from the Royal National Institute for Blind People that very few blind people now read Braille.  We do not therefore plan to incorporate Braille. However, the Bank has decided to include a tactile feature (created by a series of raised dots) on the new polymer £10 and £20 notes, and the £5 note will be distinguishable by the absence of the feature.
What happens to the old style notes when a new design is introduced?
Both old and new notes usually circulate together for a while. The old style notes are then withdrawn from circulation as they became unfit to be re-issued. At a point in time – dependent on the life of the denomination in question – the decision is made to withdraw all of the old design and at this point legal tender status is withdrawn.
What information is there available about banknotes and in particular the dates when certain notes were first issued?
In addition to the information about the key recognition and security features on the Banknote pages you can also find a list of other sources of information under the ‘more information’ main menu heading. A reference guide about banknotes is available from the Bank and this includes the dates certain notes were issued.
I need to reproduce a banknote for a legitimate reason but how do I do this?
It is possible to reproduce images of banknotes but there are specific guidelines under which this can be done. It is best to refer directly to the Reproduction guidelines that explains the procedure in more detail.
If you require further information or advice please contact the Bank at or on +44(0)20 7601 4028.
When did the Bank change the Chief Cashiers signature on some of its banknotes?
Victoria Cleland replaced Chris Salmon as Chief Cashier on 1 June 2014.  Banknotes bearing Victoria Cleland's signature were released into circulation on 3 March 2015.
What is different about Cleland signed banknotes?
The Bank has released into circulation £10, £20 and £50 banknotes of current circulating designs, updated to include the signature of the current Chief Cashier - Victoria Cleland. Other than the signature change the banknotes and their security features look identical to the existing notes.
The Bank released these notes into circulation on 3 March 2015, where they will co-circulate with existing notes bearing the signature of Chris Salmon, the former Chief Cashier. There are no plans to actively remove ‘Chris Salmon’ notes from circulation, these can continue to be used normally and retain their legal tender status but are expected to reduce in number naturally with time as they become unfit for re-circulation.
Do Cleland signed notes look different?
No, the paper Cleland notes look identical to any existing circulating paper notes, except for the replacement of Chris Salmon’s signature with that of Victoria Cleland. Any new polymer notes will contain Victoria Cleland’s signature and have new designs.
Why has the Bank changed the Chief Cashiers signature on its banknotes?
Victoria Cleland replaced Chris Salmon as the Chief Cashier in June 2014, and banknotes are being printed to reflect this as part of the Promissory Clause on each banknote. Many other issuing banks also make these changes when the signatory to the banknotes changes over time.
Are Chris Salmon signed notes still legal tender?
Yes, if they are of the currently circulating designs of the £10 (Darwin), £20 (Smith) and £50 (Boulton and Watt). There are also still a number of notes in circulation which bear the signatures of Andrew Bailey and Merlyn Lowther which also still have legal tender status. More information on current banknotes can be found at:
Do bank branches have new Cleland signature notes? If so, can I change my old notes there?
The new notes were made available to the cash industry from 3 March 2015 and started to appear in ATMs and at branch counters shortly thereafter.  There is no need to change any ‘Salmon notes’ that you hold as these will remain legal tender.
How long do paper banknotes last?
For our most transactional paper banknotes (£5 and £10) the average note life is 18–24 months. The average life of the £20 and £50 paper banknotes is significantly longer because a large proportion of them are used as a store of value rather than being used as transactional banknotes.
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Questions relating to the Scottish & Northern Ireland regime

What is the Scottish and Northern Ireland banknote legislation designed to achieve?
The legislation is designed to ensure that holders of genuine banknotes issued by the authorised banks receive a level of protection similar to that provided to holders of Bank of England banknotes. Under the Regulations the authorised banks are required to hold backing assets for their banknotes at all times. In the event of an authorised bank entering an insolvency process as defined in the Regulations, those assets will be ring-fenced for one year or any longer period that HM Treasury may decide, for the sole purpose of reimbursing noteholders through a Note Exchange Programme.

What are backing assets?
To back their banknote issue, authorised banks may use a combination of Bank of England banknotes, UK coin and funds in an interest bearing bank account at the Bank of England. Bank of England banknotes held as backing assets may be held at an authorised location or at the Bank of England. Banknotes held at the Bank may include £1 million notes (Giants) and £100 million notes (Titans), which in physical terms are permanently held at the Bank. These backing assets would be used in the event that the Bank had to implement a Note Exchange Programme.
Are Scottish & Northern Ireland banknotes "legal tender"?
In short ‘No’ these banknotes are not "legal tender"; furthermore, Bank of England banknotes are only legal tender in England and Wales. Legal tender has, however, a very narrow technical meaning in relation to the settlement of debt. If a debtor pays in legal tender the exact amount he/she owes under the terms of a contract (and in accordance with its terms), or pays this amount into court, he/she has good defence in law if he/she is sued for non-payment of the debt.

In ordinary everyday transactions, the term "legal tender" in its purest sense need not govern a banknote's acceptability in transactions. The acceptability of a Scottish or Northern Ireland banknote as a means of payment is essentially a matter for agreement between the parties involved. If both parties are in agreement, Scottish and Northern Ireland banknotes can be used in England and Wales. Holders of genuine Scottish and Northern Ireland banknotes are provided with a level of protection similar to that provided to holders of Bank of England banknotes. This is because the issuing banks must back their banknote issue using a combination of Bank of England banknotes, UK coin and funds in an interest bearing bank account at the Bank of England.
For more information see KnowledgeBank 'What is Legal Tender?' 
What would happen to any banknotes I hold if an issuing bank stops issuing banknotes?
If an authorised bank decides to stop issuing its own banknotes then it will make arrangements for their withdrawal from circulation. This is called voluntary cessation. The S&NI banknote Rules (specifically Rule 9) give more detail on this, including the minimum amount of public notice (two months) that needs to be given regarding cessation and the arrangements the authorised bank will put in place to enable noteholders to exchange their banknotes. Rule 9 does not apply if the bank becomes insolvent. 

Could other Scottish or Northern Ireland banks start issuing banknotes?
Only the seven authorised banks in Scotland and Northern Ireland can issue banknotes and the Banking Act 2009 (the Act) prevents any other banks from commencing issuance of their own banknotes.  However, the Act does permit an authorised bank to request that HM Treasury transfer issuance rights within the same banking group, by making new Regulations that designate a newly authorised bank within that banking group in place of the current authorised bank.  If HM Treasury intended to progress such a request, it must obtain the consent of the Bank of England. The Bank of England has published a statement of the matters which it would intend to take into account in deciding whether to give its consent, as required under section 214A(7) of the Act.

What is a Note Exchange Programme?
If an authorised bank becomes insolvent it can no longer issue banknotes (unless a temporary continuation is granted). In these circumstances, the Scottish and Northern Ireland Banknote Regulations 2009 require the Bank of England to make arrangements to exchange the banknotes of the insolvent issuer for an equal value of other issuers’ banknotes, coin or other funds as the Bank of England specifies. This exchange is called a Note Exchange Programme (NEP). The existence of backing assets, which are under the control of the Bank of England during the NEP, mean that holders of genuine banknotes can be assured that these banknotes retain their full value and can continue to be used immediately following an authorised bank becoming insolvent, An NEP has the effect of withdrawing that bank’s banknotes from circulation over time and ensures that all holders of that bank’s banknotes presented whilst the NEP is operating, can receive full value for their banknotes.
In practice an NEP is likely to see the public (including individuals, retailers, businesses etc) continuing to use the banknotes of the insolvent issuer in the normal way, spending them and/or paying them into their bank account and getting full value for them in the normal way. But instead of re-circulating the banknotes as would normally happen, banks will return the banknotes paid in to them to the Bank of England and receive full value for them from the Bank. These banknotes will then be permanently removed from circulation.

At the same time, when making cash withdrawals (e.g. from either an ATM or bank branch counter) members of the public will not receive banknotes of the insolvent issuer (unless a temporary continuation has been granted), but will instead receive the banknotes of another issuing bank.

An NEP would not begin immediately upon a bank becoming insolvent. The Bank would determine the start date and it would last for at least a year. There would be widespread publicity about this, giving holders of the insolvent bank’s banknotes ample time to exchange them. And because the backing assets which fully cover the value of the banknotes would be under the control of the Bank, holders of genuine banknotes exchanged before the end of the NEP would receive full value for them.

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Frequently asked questions about the Note Circulation Scheme (NCS)

How does the Bank decide how many new banknotes to issue?
The Bank issues new notes to replace notes which are no longer fit for circulation. These include notes which have been torn, stained or have holes in. In addition the Bank issues new notes to meet the general growth in use of notes.
Why doesn’t the Bank distribute banknotes itself?
The Bank has not distributed banknotes for many years as it is more efficient for commercial banks or wholesale cash operators to do this. Outsourcing distribution is cost-effective for the Bank and the off-balance sheet treatment permitted in the NCS helps finance the storage and sorting by NCS members. The risks and costs are reduced. 
What happens if one Note Circulation Scheme (NCS) member runs out of notes?
At times, some NCS members may have more notes than they need to meet their customer demand (‘surplus’ members) while some do not have enough (‘deficit’ members). This situation can arise because of different customer bases, for example an NCS member with more financial institutions than retailers among its customers is likely to send out more notes than they receive back.
The NCS includes mechanisms to encourage NCS members to share excess notes between themselves, including limits on the amount of notes that NCS members can store in Bond. If an NCS member has more notes than they can distribute to customers or store in Bond, they must offer these to another NCS member. The four NCS members also meet regularly, along with the Bank and Cash Services, to identify potential problems before they arise.
How often does the Bank inspect NCS operations?
The Bank inspects each NCS member’s depot a number of times each year. All inspections are unannounced. The main purpose of these inspections is to check the notes in Bond, which the Bank owns but NCS members store. We check that the correct number of notes has been declared and that they are being stored in accordance with our rules. We also check that the NCS member is running the test pack of counterfeit notes through their high-speed note sorters at least once a week. On top of these inspections, we inspect all security arrangements once a year. 
How does the Bank make sure that only unfit notes are destroyed?
The Bank wants NCS members to distribute fit notes to their customers and return unfit notes for destruction by the Bank. These unfit notes are replaced with new notes. But we don’t want to replace notes which are fit to be redistributed, as this would be a cost to the public purse.
In order to make sure that we only pay to replace unfit notes, we take a random sample from each NCS member’s returns every month and check for fit notes, using our high-speed note sorters. The amount of fit notes we find is scaled up to the total number of notes sent back and NCS Members are charged accordingly. More details can be found on the link below.
How are the costs of printing banknotes met?
NCS members purchase new banknotes from the Bank at face value. The Bank invests this money in interest bearing assets, such as UK government bonds. The Bank deducts the costs of printing banknotes from the income on these assets, and the balance is returned to HM Treasury. This income is known as seigniorage. Total seigniorage in 2014-15 was £576 million, of which £70 million was spent on printing and issuing banknotes, with the remaining £506 million paid to HM Treasury.

When NCS members return banknotes to the Bank they are sampled and destroyed. The NCS rules allow NCS members to return unfit notes to be replaced at no cost. The replacement cost is deducted from seigniorage. However, if NCS members return fit notes, they must pay a charge equivalent to the remaining note life. This charge offsets part of the replacement cost, ensures that seigniorage is protected, and means that the taxpayer does not bear the costs of errors made by the commercial sector.

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