Explanatory note

These Regulations are made under Parts 6 and 8 of the Banking Act 2009 (c. 1) and make provision about the treatment, holding and issuing of banknotes by the banks who are authorised to issue banknotes in Scotland and Northern Ireland (other than the Bank of England).

Part 2 of the Regulations sets out provision in relation to the Bank of England. In particular, regulation 3 gives the Bank of England a power to make banknote rules.

Part 3 sets out provision in relation to backing assets. In particular, regulation 9 makes provision in relation to the ownership of, and interests in, backing assets.

Part 4 sets out various requirements in relation to banknotes.

Part 5 concerns the provision of information and reports to the Bank of England.

Part 6 sets out provision in relation to the insolvency of a note issuing bank. In particular, regulation 21 requires the Bank of England to conduct a note exchange programme, whereby the banknotes of the insolvent bank are exchanged for banknotes of another bank (which may include the Bank of England).

Part 7 sets out provision in relation to enforcement of these Regulations and the banknote rules.

Schedule 1 specifies modifications to the law of insolvency as it applies to note issuing banks.

Schedule 2 specifies similar processes and laws in the Republic of Ireland.

Schedule 3 sets out further provision in relation to the imposition of penalties by the Bank of England.

An Impact Assessment of the effect of these Regulations is available on HM Treasury’s website (www.hm-treasury.gov.uk) and is annexed to the Explanatory Memorandum which is available alongside these Regulations on the OPSI website (www.opsi.gov.uk).