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A brief history of the pound

In 2017 The Royal Mint will introduce a new twelve-sided £1 coin, replacing the current £1 which has been in circulation for over 30 years. The decision to replace the coin was made in March 2014 in an attempt to maintain the integrity of the UK currency, amidst a growing number of counterfeits. It is predicted that as many as 3% of the 1,528 million £1 coins[1] in circulation are counterfeits, and consequently HM Treasury have decided to replace it with what the Royal Mint claims is the most secure coin in the world. The new coin will have banknote-strength security, and will be the first coin to incorporate Integrated Secure Identification Systems (iSIS) technology, making it harder to counterfeit, and easier to identify than any coin before it.[2]

The £1 coin is one of the oldest sterling coins in circulation, with only the copper coins (1p and 2p) and the 20p lasting longer in their current forms. Since its introduction in 1983 the coin has featured three portraits of The Queen, with a final fourth to be unveiled later this year[3], and 23 different designs[4] on the reverse (or tail side). Its appearance is not the only thing that’s changed throughout its time in circulation. The purchasing power has changed drastically since the first coins were minted. In 1983 one pound would get you 2.77 litres of petrol, today it wouldn’t even get a litre[5].

Despite its longevity, the £1 coin is relatively new in the history of the pound as a denomination. The pound became a unit of account towards the end of the 8th century when silver pennies were introduced by King Offa of Mercia. Back then 240 silver pennies were the equivalent of one pound, by weight, of silver, hence the homonym ‘pound’. From its introduction until the late 20th century the pound sterling remained equivalent to 12 shillings, or 240 pence. In 1971 this finally changed with decimalisation, scrapping the shilling and converting to a decimal-based system in which 100 pence was equal to one pound.

At the time of decimalisation, the pound was only present in note form, as it had been sporadically since the end of the 18th century. As with many banknotes, particularly those tendering lower denominations, it faced durability challenges –with each note lasting on average just nine months[2]. This short lifespan, combined with the pound’s declining purchasing power and the growth of the vending industry, led to the development of the £1 coin. First minted in 1983, the new coin was (and still is) composed of copper (70%), nickel (5.5%), and zinc (24.5%), and was the first coin to represent the singular value of the currency. Like most coins, the £1 coin has a life expectancy of around 40 years[2].

To aid with the transition from note to coin, more £1 coins were minted in 1983 than any other year, and those early coins remain some of the most common in circulation[6]. In its maiden year the coin featured the familiar ornamental royal arms on the reverse, and the Arnold Machin portrait of Queen Elizabeth II on the obverse. Over the years the coin has undergone a number of changes, including a further two portraits of Her Majesty, with another due next year, along with a further 22 designs on the reverse and six different Latin inscriptions around the edge. The coin was designed to stand out from others in circulation at the time, given the popularity of £1 as a unit of currency. The coin is nearly twice as thick as some other UK coins at 3.15mm, and has an unusual ‘yellow’ colour to distinguish it from other ‘silver’ or ‘bronze’ coins.

As is the case with most new coins, the public did not take well to pound coin initially, with many (including the then Prime Minister Margaret Thatcher) believing that the coin would be removed from circulation[7]. As it happened, printing of the £1 note ceased the year after the coin’s introduction, and it was formally removed from circulation in 1988[8].

From then until the present day the one pound unit of sterling currency has only been used in coin form, and the volume of coins that remain from those early years is a testament to its reliability.

In recent years, however, counterfeit production has increased rapidly, creating a significant cost to the economy. In the last ten years the proportion of counterfeit pound coins in circulation has tripled, and today it is estimated that there are around 45 million forged coins[9]. Many counterfeits have become so common – and accurate – that the general public struggles to identify the difference. Further, around half of counterfeits are accepted by vending machines[5].

So, the only long term solution to the growing problem was to retire the coin and replace it with one that was harder to replicate. The replacement will be bi-metallic, like the current £2 coin, and is said to be the hardest coin to copy in the world. It is inspired by the old three penny bit, featuring 12 straight edges, along with a range of sophisticated security features[10]. The Royal Mint hope that the new security features will eliminate forgeries, increase public confidence in the pound, and maintain the integrity of the currency. At a time when the dominance of cash payments is under threat from hi-tech alternatives, a new coin is vital to ensure the pound still has a place in public’s pockets.

[1] http://www.royalmint.com/discover/uk-coins/counterfeit-one-pound-coins

[2] http://www.royalmint.com/business/circulating-coin/integrated-secure-identification-systems

[3] http://www.royalmint.com/aboutus/news/the-royal-mint-commemorates-artist-of-first-queens-portrait

[4] http://www.royalmint.com/discover/uk-coins/coin-design-and-specifications/one-pound-coin

[5] https://uk.finance.yahoo.com/news/pound-coin-introduced-30-years-141454470.html

[6] http://www.royalmint.com/discover/uk-coins/circulation-coin-mintage-figures/two-pounds-to-20p-issued

[7] http://news.bbc.co.uk/onthisday/hi/dates/stories/november/12/newsid_2518000/2518637.stm

[8] http://www.bankofengland.co.uk/banknotes/Pages/denom_guide/default.aspx

[9] http://www.independent.co.uk/news/business/news/vendors-count-cost-of-new-1-coin-9883496.html

[10] http://www.royalmint.com/aboutus/news/the-new-1-pound-coin