was passed in 1845 and this Act regulates today's note issue by the Scottish banks. The banks were permitted to issue notes to the extent of the average circulation for the year to 1 May 1845 without any backing of coin or security. That act is still in force, and for the three Scottish banks which today issue their own banknotes only£3m comes under that privilege out of nearly £1,500m in circulation. The balance has to be covered at the Bank of England.
An interesting feature of the Scottish banknotes has been the fact that they have never (apart from under temporary provisions introduced in both World Wars) been "legal tender" even in Scotland, although they are, of course, legal currency.