Yes, £100,000,000 notes. That’s a lot of zeroes.The Bank of England has created 8 billion pounds worth of million-pound and hundred pound notes, but no, you can’t use them. They’re not meant for you. You’re too poor. Obvi.
“When it comes to a £1m note, everybody thinks, ‘What a fantastic thing’,” says Barnaby Faull, head of the banknote department at the auctioneers Spink.
“What most people don’t realise is they do actually exist.”
But the £1m pound note – known as a “giant” – is not in circulation and it is inconceivable it will be made available from cashpoints. How many of us would risk carrying one around in our wallet, let alone have sufficient funds in our account to get one out?
But even the monetary value of the giant is relatively small compared to the “titan” – a banknote that promises to pay its bearer £100m.
The purpose of the ridiculously large notes is one that is relatively confined to a quirk in international monetary policy, but there’s a bit of back-story here.
In most parts of the world, our currency is backed by a policy known as “Fiat Money.” Fiat currency basically says that this five dollar bill is worth five dollars because we say it is worth five dollars, and nothing more. Back in the day, currency was usually backed by either gold or silver, those being the so-called “gold standard” or “silver standard.” Back then, you could walk into a bank, ask for five dollars worth of gold, and they would have to produce five dollars worth of the yellow stuff, usually a pinch or two.
Even more complicated, before 1900, many countries had no national bank notes. Bank notes were often printed by local banks, and were redeemable for gold or coins when you brought those notes into the bank. If a bank went belly-up, well that was too bad for you. You lost all your money. For this reason, many establishments didn’t accept bank notes from banks they didn’t recognize, if at all.
While this all sounds good and dandy (I mean, hey, your money is worth something real, right?), it presents a problem of economics. What if you want to purposely lower or raise the value of your currency? There are a number of reasons you’d want to do this, mainly tied to exports and imports, but that’s for another time. What’s important here is that if your currency is pegged to the gold standard, you can’t easily raise or lower the value of your currency, as gold is a commodity. Just like any other commodity- cotton bales, pork bellies, etc..
So over the decades before and after World War II, most of the countries around the world switched over to fiat money, which allows for a lot more flexibility. Because if your money is worth what you say it is, then you can have your money however you want it.
So what does this all have to do with Titan and Giant banknotes?
Well, Scotland is a part of the United Kingdom of Great Britain and Northern Ireland, and has been for a long time. That doesn’t mean Scotland is necessarily happy about this. To keep the Scottish happy, from time to time the nation of Scotland has been granted more authority by the Parliament in London.
One of those issues of autonomy was that the Scots were allowed to print their own bank notes, which led to the Scottish pound.
If you can see on those banknotes, there isn’t anything official like “The Government of Scotland hereby declares this note” blah blah blah. Those notes say things like Clydesdale Bank, the Bank of Scotland, and the Royal Bank of Scotland. Those last two can get confusing, I know.
But here we have that problem that was encountered in 19th century. What’s to stop a merchant from refusing to accept money backed by a bank, whereas the financial crisis in 2008 taught us all that it is actually quite easy for banks to fail, if governments don’t prop them up.
Herein lies the purpose of the ridiculous large bills. They sit in vaults for the three banks that issue Scottish pound notes, and back all of those notes in circulation with the full faith and credit of the Bank of England. Despite the “Bank” of England being called that, it is not a corporate bank in the way that the three Scottish banks are. Being more secure, it enables businesses and consumers to engage in transactions without fear or worry.
And that is why we have Giants and Titans.
Photo Credit: BBC/Banknotes.com