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The History of the British Pound

The British pound, also now known as the pound sterling, is generally considered to be the world's oldest currency that is still actively used and circulated. It originated during the 760s when King Offa of the Mercian kingdom (present-day Staffordshire) introduced the silver penny into the coinage of the time. Inspired by the Carolingian system, 240 of the new pennies equaled a pound in silver. Additional subdivisions of coins included farthings and shillings. Shortly after introducing this system in Mercia, the surrounding Anglo-Saxon kingdoms of the Heptarchy followed suit and also adopted it. Eventually the pound became the standard monetary unit in the region.

In King Offa's time, pennies were actually made from pure or extremely fine silver. During the reign of King Henry II in 1158, a change was made so that pennies were cast from 92.5 percent silver. Since this alloy was not pure silver, it was harder and could last longer. Today we know it as sterling silver. Later in 1344, gold was also used in creating coins, although silver was still predominant. By 1464, the amount of silver in the coins reduced even further, from an original amount of 1.5 grams in King Offa's time to 0.78 grams in King Henry IV's reign. Approximately a hundred years later, only 33.3 percent of the coins were pure silver. This lent them a pale, coppery appearance. During the next century, the size and composition of the coins continued to fluctuate, affecting their value as well.

During the early 1800s, Britain adopted a monetary system that used a fixed amount of gold as a standard for their currency. When several other countries followed the same system, it became easier to convert currencies with precision. Until the early 1970s, British money still adhered to the historic subdivisions of farthings, pennies, shillings, pounds, guineas, florins, half crowns, sixpences and threepenny bits. According to this system, 12 pennies made a shilling, while a pound was equal to 20 shillings. It caused much confusion to outsiders and made it difficult to trade and exchange money.

During the Victorian era, many political individuals argued that the nation's currency should be converted to a decimal system. This would make it more standardised and easier for foreigners to grasp. The change process took two years to publicise and implement. Finally on Decimal Day, 15 February 1971, the pound was officially decimalised. In this new version, 100 pennies equaled a pound. Newly issued coins included five and 10 pence coins, which were equivalent to the older one and two shilling change. It did take some time for people to adjust to the new system, but they did eventually become used to it. More recently with the birth of the European Union, the UK did become eligible to abandon the pound and adopt the Euro as an official currency instead. However, they declined, citing a number of reasons that included the fact that the pound is strongly viewed as a representation of the country's sovereignty. Apart from its use in the UK, the pound is also officially used in the Isle of Man, Jersey and Guernsey, all of which are British Crown Dependencies, as well as in Gibraltar and the Falkland Islands. Additionally, Britain's Overseas Territories (Tristan da Cunha, the British Antarctic Territory, and South Georgia and the South Sandwich Islands) also use the pound sterling. It is important to note that some of these regions issue their own versions of the pound, such as the Jersey pound or the Guernsey pound.