History Of The Pound Sterling
The Pound Sterling (UK Pound) has a long and interesting history. The pound was originally a unit of currency used by the Anglo-Saxons as early as the sixth century, and it is the oldest currency still in use. Originally, the pound was equivalent to one pound, in weight, of silver or to 240 silver pennies. The sterling was not added until much later.
The pound went through several incarnations over the following centuries. The coins were initially made from the purest silver available. King Henry II changed this in 1158 by decreeing that pennies would now be 92.5% silver. This standard quickly became known as sterling silver and was in use until the 20th century. The pound soon became the pound sterling.
In 1694 the Bank of England was formed and it quickly adopted the Pound Sterling as its official currency. This date is widely recognized as the establishment of the modern British currency system.
The United Kingdom stayed on the gold standard for much of the eighteenth and nineteenth centuries. The gold standard was officially adopted in 1816 and silver coins were reduced to token issues. This reduced the value of the silver standard to 66 shillings, which meant the coins were no longer worth as much as the precious metals inside them. By the next year the gold sovereign, worth 20 shillings, had been introduced and was in wide circulation.
When World War I broke out in 1914 the gold standard was suspended. The economy of the U.K. was destabilised during the war and an attempt was made to reinstitute the gold standard in 1925. This attempt did not fare well, and the government abandoned the gold standard completely in September of 1931. The sterling was devalued by 25% on the day the gold standard was officially dropped.
The pound is denominated by the £ symbol. Before decimalization the pound was divided into pence and shillings, with one shilling being worth 12 pence and the pound being worth 20 shillings, or 240 pence.
The pre-decimal £.s.d system was changed to the decimal, or £.p, system on February 15, 1971, but decimalised coins were circulating as early as 1968. The pound is now divided into 100 pence. Coins are issued in penny (1p), two pence, five pence, 10 pence, 20 pence and 50 pence denominations. Special issues are usually done in either 25p or £5 denominations. Paper money is used for larger denominations.