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I have a few hundred pounds of out-of-circulation notes. The Bank of England moved from paper to polymer notes a few years ago, and I had forgotten about some paper notes at the bottom of our safe. By the time I rediscovered them, they were no longer legal tender, and the period to exchange them at normal banks had ended.
Knowing I was flying to London, I decided to bring them with me and present myself at the Bank of England headquarters to exchange them for crisp, shiny new £20 notes. I conducted myself in an exemplary manner, figuring I really didn’t want to be on the radar of the custodians of the nation’s money supply. Better safe than sorry is my motto!
After exiting the building slightly richer, I reflected on the history and physical manifestation of this institution and other central banks around the world, and how their existence and combined decisions directly impact my retirement finances. I felt a tiny sense of connection, however small, to a system that I usually only read about in the news. My own financial stability is not solely determined by my investment choices. It’s also shaped by the actions of these powerful bodies.
They are tasked with the balancing act of keeping the economy stable, and every adjustment they make to the money supply or interest rates has consequences that echo through every sector—from the housing market to the stock market. These echoes are what will eventually directly impact the quality of life I can afford in my retirement. My small errand yesterday was a reminder of a much larger and more complex financial world that we all live within. Hopefully they conduct their business wisely. And on a more personal note, that my name hasn’t been flagged as a person of questionable character!
I have quite a collection of foreign currency in a drawer in my desk. Some of it is over 20 years old and undoubtedly worth a lot less than when I acquired it because of inflation. My most recent trip to the UK, in 2018, I visited a bank to exchange my outdated UK notes. Hearing my accent the teller thought I was a local and asked where I had found them. More recently, friends took the already outdated notes from that trip with them to England and returned me the latest version. Changes used to take a lot longer, but I suppose counterfeiters are more sophisticated these days.
My head is spinning just thinking about these institutions you’ve raised and the impact on our finances, well-being and lives. I prefer to focus on the things I have some control over like my health and day to day activities for happiness and enjoyment.
Mark, thanks for an interesting story. I find a national and interanlional monetary operations to be one of the most complex topics in economics and finance. My father worked in mortgage banking on the 1970s and 1980s. I recall hearing discussion of the Fed and interstate rates, and the huge impact their decisions had on his business. I doubt I’ll ever feel like I have a reasonable understating of this.
Thanks Mark. Interesting to think of how many complex systems we rely on – electrical supply, data, phone, road networks….and finance. Testament to what societies can build over time.