What is Legal Tender and the Promise to Pay

Legal Tender and the Promise to Pay

Legal Tender

The concept of legal tender is often misunderstood. Contrary to popular opinion, legal tender is not a means of payment that must be accepted by the parties to a transaction, but rather a legally defined means of payment that should not be refused by a creditor in satisfaction of a debt.

The current series of Bank of England notes are legal tender in England and Wales, although not in Scotland or Northern Ireland, where the only currency carrying legal tender status for unlimited amounts is the pound coin.

Promise to pay

The “…promise to pay the bearer the sum of …” on Bank of England notes has nothing to do with legal tender status. The promise to pay stands good for all time and means that the Bank will pay out the face value of any genuine Bank of England note no matter how old.

The promise to pay also holds good for damaged notes, as long as enough of the note survives to prove that it was genuine and no previous claim for it has been received. The Bank’s mutilated notes department receives some 23,000 claims a year for anything from fire damage to notes eaten by all manner of household pets.

In order to fulfil its promise to its customers – the promise to pay – the Bank must ensure that the currency maintains as stable a level as possible, in other words, that the value of its notes is not eroded by inflation. This is the role of monetary policy, which is one of the Bank’s main responsibilities. It must also guarantee the integrity of its notes; making sure that they are as difficult as possible to counterfeit, that they are readily and securely available to banks and building societies upon demand, and, subject to these constraints, that they are attractive and easily identifiable both to the human eye and to note reading machines.

Value of notes in circulation
Millions End-February
1992 1993 1994 1995
£1  59 58 57 57
£5 1,166 1,163 1,135 1,072
£10 5,743 5,348 5,245 5,348
£20 5,288 6,101 6,818 7,723
£50 2,515 2,732 2,884 2,852
Other notes 1,350 1,563 1,024 1,004
Total 16,121 16,965 17,163 18,056

Paper money

The first recorded use of paper money was in the 7th century in China. However, the practice did not become widespread in Europe for nearly a thousand years.

In 1694 the Bank of England was established and almost immediately started to issue notes in return for deposits. The crucial feature that made Bank of England notes a means of exchange was the promise to pay the bearer the sum of the note on demand. This meant that the note could be redeemed at the Bank for gold or coinage by anyone presenting it for payment.

These notes were handwritten on Bank paper and signed by one of the Bank’s cashiers. They were made out for the precise sum deposited in pounds, shillings and pence.

During the 18th century there was a gradual move toward fixed denomination notes which by 1745 were being part printed in denominations ranging from £20 to £1,000. In the latter half of the century gold shortages caused by war and revolution led to the production of £10, £5, £2 and £1 notes.

The first fully printed notes appeared in 1855 relieving the cashiers of the task of filling in the name of the payee and signing each note individually. The phrasing “I promise to pay the bearer on demand the sum of …” was introduced at this time and remains to this day.

In 1833 the Bank’s notes were made legal tender for all sums above £5 in England and Wales.


Early Bank of England notes were printed in black on white with no design on the back. They were much larger than modern notes. Although the Bank experimented with colour, new designs and printing techniques, its notes remained essentially the same throughout the 19th and early 20th centuries.

The 1928 Series A 10 shilling and £1 notes were the first coloured notes to be issued by the Bank and the first to be printed on both sides. The “white fiver”, unchanged for 100 years, was eventually replaced by the 1957 Series B blue £5 note. It was not until the 1960 Series C (Portrait Series) notes that the portrait of the reigning monarch became a feature on the Bank’s notes.

British historical figures have been depicted on the back of notes since the 1970 Series D (Pictorial Series). The character chosen has to have made an indisputable contribution to British history, be uncontroversial and, importantly, provide suitable pictorial material for the Bank’s design team.

The theme of historical figures has been continued for the current Series E (1990-1994). George Stephenson, Charles Dickens and Michael Faraday are depicted on the £5, £10, and £20 notes respectively. The £50 note features Sir John Houblon, the first Governor of the Bank.

Sir John Houblon

Born in 1632, Sir John was one of seven brothers of Huguenot descent. Two of his brothers also served as founder Directors of the Bank. It was on the site of Sir John’s own house that the Bank’s first premises in Threadneedle Street were built in 1734. Tradition has it that the pink colour of the Bank’s messengers’ coats owes its origin to the livery worn by Sir John Houblon’s household.

Printing Processes ( 2000 CE)

In 2000, three printing processes were used in the printing of banknotes.

  1. Offset Litho
  2. Intaglio
  3. Letterpress

Offset Litho

The printing plates, which are manufactured in-house, transfer the ink to the paper via an intermediate offset roller. This process is used to print most of the front and back of the note, except for the portrait of Her Majesty The Queen, the lettering and the numbering. Offset printing involves a number of separate plates with different colours superimposed in close register to produce high quality, clearly defined images.


Intaglio printing is used to add the portrait of Her Majesty The Queen and the lettering to the front of the note. The ink rests in grooves engraved into the plate. When the plate comes into contact with the paper the ink is forcibly ‘drawn’ from the plate onto the paper under very high pressure. This produces the raised print which is one of the characteristics that gives Bank of England notes their distinctive feel.


Letterpress printing is used for the cypher and serial numbers on the front of the note. Ink is transferred onto the raised letters and digits are printed onto the note.

The printing and destruction of banknotes, the Bank of England is able to offer a range of commercial services through its subsidiary company Debden Security Printing Ltd (DSP). DSP is wholly-owned by the Bank of England and was primarily established to sell security printing services to customers both in the UK and abroad. The Bank of England itself is prevented, under the terms of its 1694 Charter, from engaging directly in any commercial activities. DSP can also offer devices to protect the integrity of high value consumer goods as well as providing security design, platemaking, ink and thread manufacture, training and consultancy services. Secure storage and destruction facilities are also available and the company markets a unique range of banknote related giftware.

Banknote Production

The Bank of England( In 1946 it was brought into state ownership) has issued banknotes since it was founded in 1694 and today all English notes are produced at the Bank of England Printing Works, situated at Loughton in Essex. The Bank had the right to issue Bank notes in England and Wales, and acquired the monopoly after the Bank Charter Act of 1844.

Each year the Works produce nearly one thousand four hundred million notes (enough notes, put end to end, to stretch half-way to the moon). The notes are produced at an average unit cost of well under three pence, making the Bank one of the most cost effective Central Banknote Producers in Europe. One of the aims at every stage is to ensure that the note is as difficult as possible to counterfeit. Some images are engraved by hand into metal plates, whilst others are created using a Computer Aided Design (CAD) system and are drawn onto film by a laserbeam. When finished, the images are duplicated many times onto printed plates ready for the presses. The specialised inks used to produce the notes are also manufactured at the Printing Works; more than 100 are required for the four denominations.

The watermark design is engraved in wax and, like the metallic thread, the image is incorporated into the paper as it is made. The sheets of notes are then manually examined for flaws before the cypher and serial number are added.

Source: Bank of England

  • “The Bank of England Note” by A D MacKenzie (Cambridge University Press, 1953)
  • “Promises to Pay” by Derrick Byatt (Spink and Son, 1994).
  • “As Good as Gold: 300 Years of British Bank Note Design” by V Hewitt and J M Keyworth (British Museum, 1987).

Categories: BANKING

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