Tracing the Banks of Ireland, Part 3
Posted on 2/19/2019
Last month's article ended with a newly formed Ireland after the Anglo-Irish War split the country into two countries: Northern Ireland and the Irish Free State. Northern Ireland wanted to stay in the British Commonwealth while the Irish Free State wanted out. Shortly after, acts were passed to separate the banking of these new nations and steps were taken in the Irish Free State to remove themselves of a monarch.
In the newly formed Irish Free State, a currency commission was formed by the Currency Act of 1927. The prior system had been adequate and stable, but the government of Ireland wanted to have greater control over the banking system.
The commission was formed to transition increased control in the new country rather than drastically change the existent system. The Act established that the current six banks allowed to issue notes in Ireland would continue, but their notes would come from the commission, much like a joint issue.
The Irish Free State existed until 1937 when Ireland adopted a new constitution. A new currency commission was formed shortly after, in 1938. Later, when dealing with World War II, Ireland decided to form a central bank to have better control over Ireland’s currency, and the country passed the Central Bank Act of 1942.
During World War II, Ireland remained neutral, but still was having its currency produced and shipped from England. Fearing a capture of one of these currency shipments, Ireland had an additional security feature added to the notes known as the Emergency Tracer Overprint, or ETO. This overprint added a small letter in the top left and bottom right of the note. Now, if the notes were ever seized by an enemy, they could easily nullify any notes with the code letters from the shipment. The war ended without any notes being seized.
The Central Bank of Ireland began operation in 1943, after the passing of the Central Bank Act. But the newly formed bank was, in reality, a currency board. The bank was using fixed exchange rates to a foreign currency: England’s. The Republic of Ireland was still linked to Sterling for its exchange rate, and if England were in a crisis, Ireland would be, too.
In the meantime, the Bank of Ireland would be the Government of Ireland’s bank. The Central Bank of Ireland would not take on the full role of central bank until the 1970s.
A series of events, including an oil crisis, pushed The Republic of Ireland to finally break from England’s Sterling for the country’s exchange rate.
The oil crisis produced inflation in England, and the inflation was compounded for Ireland due to its currency being backed by England’s Sterling. Ireland decided to join the European Monetary System (EMS), which linked other European countries together to prevent large changes in their countries’ currency exchanges. The EMS was not perfect, as many of the countries in the EMS had different exchange rates and policies.
The EMS lead to the Economic Monetary Union (EMU), in which a majority of the countries in the European Union ceased to produce their own currency and began to use the Euro. This more cohesive state for economic policies amongst European countries can help with security, stability and easier trade amongst nations. Thus, in 2002, the banks of Ireland began issuing the Euro instead of Irish Pounds.
In Northern Ireland, only six banks were allowed to issue banknotes, and the Bankers Act of 1928 shrank the amount of notes they were allowed to issue. The banks also were required to be backed by British currency only, as they were still apart of England’s dominion.
Northern Ireland’s banks have consolidated since 1928, changing ownership and merging together. The six banks that were allowed to issue notes in Northern Ireland were the Bank of Ireland, Belfast Banking Company, National Bank, Northern Bank, Provincial Bank of Ireland, and Ulster Bank.
Today, in Northern Ireland, there are the “Big Four” that still issue banknotes. Ulster Bank and the Bank of Ireland, which absorbed National Bank, still remain in operation. Northern Bank acquired Belfast Banking Company, and then merged with Danske Bank, making Danske the issuer of new banknotes.
Provincial Bank of Ireland was bought by Allied Irish Banks, issuing new notes under the Allied Irish Bank name. A few years later, Allied Irish Banks merged with Trustee Savings Banks and rebranded itself as the First Trust Bank.
Northern Ireland is one of the few places left in the world that allows private companies to issue banknotes. Between Ireland and Northern Ireland, we have graded over 6,000 notes. With the complex history of these countries, a banknote from them makes for a great addition to any collection.
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