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Banking Act 2009

Banking Act 2009

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The Banking Act 2009 is an Act
Acts of Parliament in the United Kingdom
An Act of Parliament in the United Kingdom is a type of legislation called primary legislation. These Acts are passed by the Parliament of the United Kingdom at Westminster, or by the Scottish Parliament at Edinburgh....

 of the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...

 that entered into force in part on the 21 February 2009 in order, amongst other things, to replace the Banking (Special Provisions) Act 2008
Banking (Special Provisions) Act 2008
The Banking Act 2008 is an Act of the Parliament of the United Kingdom that entered into force on the 21 February 2008 in order to enable the UK government to nationalise high-street banks under emergency circumstances by secondary legislation...

. The Act makes provision for the nationalisation of banks, amends the law on bank insolvency and administration, and makes provision about the Financial Services Compensation Scheme
Financial Services Compensation Scheme
The Financial Services Compensation Scheme is a "statutory fund of last resort" in the United Kingdom, set up under the Financial Services and Markets Act 2000 to compensate customers of "authorised financial services firms" in the event of their insolvency. It consolidated previous compensation...

. It also makes provision about the regulation of inter-bank payment schemes (e.g. BACS
BACS
Bacs Payment Schemes Limited is a United Kingdom scheme for the electronic processing of financial transactions. BACS direct debits and BACS direct credits are made using the BACS system...

), amends the law on the issue of banknotes by Scottish and Northern Irish banks, and makes other miscellaneous amendments to the law on banking.

Banknotes


Part 6 of the Act specifically deals with the right of certain commercial banks in Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...

 and Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...

 to issue their own private banknotes, repealing the Bank Notes (Scotland) Act 1845, the Bankers (Ireland) Act 1845 and the Bankers (Northern Ireland) Act 1928. The 2009 Act empowers HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...

 to control banknote issue more strictly, requiring commercial note-issuing bank to maintain backing assets so that, in the event of the commercial failure of a bank, the value of their banknotes would be protected.

The Act additionally prohibits the issue of banknotes by any other banks other than those authorised under the 1845/1928 legislation and the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...

, and provides that, if a commercial bank decides to discontinue the issuing its own banknotes, it then irrevocably loses its note-issuing privileges.

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