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Think your money is legal tender? Don’t bank on it

Readers have a habit of shining spotlights on unexpected issues that throw up interesting queries. Or, on occasion, a downright can of worms.

Sometimes this takes the form of particular stock phrases trotted out by writers without much thought as to their exact meaning.

A case in point is the use of the phrase ‘legal tender’ in recent stories about Danske Bank.

Danske, you will recall, has been Northern Bank’s parent company since 2005.

It was recently announced that the separate identity of Northern Bank as a name and brand is being swallowed up by Danske and will disappear by the end of this year.

Danske said it will continue to issue sterling banknotes in Northern Ireland. In the ensuing debate, correspondents — not just in the Belfast Telegraph — referred to Northern Irish notes as being ‘legal tender’, but reader Ian Stewart writes in to take us to task over the use of the phrase.

Northern Ireland banknotes, Ian says, are ‘legal currency’, but not ‘legal tender’.

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He explains: “Legal tender means currency which must be accepted as payment.

“Coinage is legal tender up to specific values across the UK, but Bank of England notes are only legal tender in England and Wales. (Scottish notes are in the same situation).

“This means no banknotes are legal tender in Northern Ireland.”

Ian adds: “It may be a small point, but it is misleading to people who expect the notes to be accepted outside Northern Ireland.

“Retailers may accept them, but there is no legal requirement for them to do so.”

Now, I’m no expert in these matters and if others are of a different view, please write in to let us know.

However, research backs Ian’s point: ie that Northern Ireland (and Scottish) banknotes are not actual legal tender anywhere in the UK.

They are, in fact, what is known in the jargon as ‘promissory notes’, which is basically a glorified promise in writing to pay a certain amount of money and which are backed with deposits at the Bank of England.

At this stage, the left side of my brain starts to wonder what happens to the value of these banknotes it there was ever a run on Northern Ireland, or Scottish, banks — and then the right |side kicks in with a warning to wise up.

The basic and useful point of Ian’s letter is to warn local people that, while they can urge a business in, for example, London to accept their Northern Ireland banknotes (and some do), they have no basis in law for doing so.