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Session 2008 - 09
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Banking Bill


Banking Bill
Part 5 — Inter-Bank Payment Systems

102

 

Miscellaneous

200     

Fees

(1)   

The Bank of England may require operators of recognised inter-bank payment

systems to pay fees.

(2)   

A requirement under subsection (1) must relate to a scale of fees approved by

5

the Treasury by regulations.

(3)   

Regulations under subsection (2)—

(a)   

shall be made by statutory instrument, and

(b)   

shall be subject to annulment in pursuance of a resolution of either

House of Parliament.

10

(4)   

A requirement under subsection (1) may be enforced by the Bank as a debt.

201     

Information

(1)   

The Bank of England may by notice in writing require a person to provide

information—

(a)   

which the Bank thinks will help the Treasury in determining whether

15

to make a recognition order, or

(b)   

which the Bank otherwise requires in connection with its functions

under this Part.

(2)   

In particular, a notice may require the operator of a recognised inter-bank

payment system to notify the Bank if events of a specified kind occur.

20

(3)   

A notice may require information to be provided—

(a)   

in a specified form or manner;

(b)   

at a specified time;

(c)   

in respect of a specified period.

(4)   

The Bank may disclose information obtained by virtue of this section to—

25

(a)   

the Treasury;

(b)   

the FSA;

(c)   

an authority in a country or territory outside the United Kingdom

which exercises functions similar to those of the Treasury, the Bank of

England or the FSA in relation to inter-bank payment systems;

30

(d)   

the European Central Bank;

(e)   

the Bank for International Settlements.

(5)   

Subsection (4)—

(a)   

overrides a contractual or other requirement to keep information in

confidence, and

35

(b)   

is without prejudice to any other power to disclose information.

(6)   

The Treasury may by regulations permit the disclosure of information

obtained by virtue of this section to a specified person.

(7)   

The Bank may publish information obtained by virtue of this section.

(8)   

The Treasury may make regulations about the manner and extent of

40

publication under subsection (7).

 
 

Banking Bill
Part 6 — Banknotes: Scotland and Northern Ireland

103

 

(9)   

Regulations under this section—

(a)   

shall be made by statutory instrument, and

(b)   

shall be subject to annulment in pursuance of a resolution of either

House of Parliament.

(10)   

It is an offence—

5

(a)   

to fail without reasonable excuse to comply with a requirement under

this section;

(b)   

knowingly or recklessly to give false information in pursuance of this

section.

(11)   

A person guilty of an offence is liable—

10

(a)   

on summary conviction, to a fine not exceeding the statutory

maximum, or

(b)   

on conviction on indictment, to a fine.

202     

Pretending to be recognised

(1)   

It is an offence for the operator of a non-recognised inter-bank payment

15

system—

(a)   

to assert that the system is recognised, or

(b)   

to do anything which suggests that the system is recognised.

(2)   

A person guilty of an offence is liable—

(a)   

on summary conviction, to a fine not exceeding the statutory

20

maximum, or

(b)   

on conviction on indictment, to a fine.

203     

Saving for informal oversight

(1)   

Nothing in this Part prevents the Bank of England from having dealings with

the operators of payment systems to which this Part does not apply.

25

(2)   

Nothing in this Part prevents the Bank from having dealings, other than

through the provisions of this Part, with the operators of payment systems to

which this Part does apply.

Part 6

Banknotes: Scotland and Northern Ireland

30

Introduction

204     

Overview

This Part—

(a)   

repeals existing provisions about permission to issue banknotes in

Scotland and Northern Ireland, and

35

(b)   

replaces the provisions, but only for banks which already have

permission to issue banknotes.

 
 

Banking Bill
Part 6 — Banknotes: Scotland and Northern Ireland

104

 

Key terms

205     

“Banknote”

In this Part “banknote” means a promissory note, bill of exchange or other

document which—

(a)   

records an engagement to pay money,

5

(b)   

is payable to the bearer on demand, and

(c)   

is designed to circulate as money.

206     

“Issue”

(1)   

For the purposes of this Part a banknote is issued when it passes—

(a)   

from a person who holds it not as bearer but as a person carrying on the

10

business of banking (“the issuing bank”), and

(b)   

to a person taking as bearer (“the bearer”).

(2)   

In subsection (1)(a) the reference to a banknote passing from the issuing bank

includes a reference to it passing—

(a)   

from the issuing bank’s agent, or

15

(b)   

from a person printing or preparing the banknote for, or taking it to, the

issuing bank or its agent.

(3)   

For the purposes of subsection (1)(b) it does not matter whether the bearer also

holds the banknote for use in the business of banking.

207     

“Authorised bank”

20

In this Part “authorised bank” means a bank which immediately before

commencement was authorised to issue banknotes in Scotland or Northern

Ireland.

208     

“Commencement”

In this Part “commencement” means the date set for the coming into force of

25

section 209 (under the commencement power in section 253).

Authorisation to issue

209     

Repeal of old authorising enactments

The following shall cease to have effect—

(a)   

section 1 of the Bank Notes (Scotland) Act 1845 (authorisation to issue

30

banknotes), and

(b)   

section 8 of the Bankers (Ireland) Act 1845 (authorisation to issue

banknotes).

210     

Saving for existing issuers

An authorised bank may continue to issue banknotes after commencement, but

35

only—

(a)   

in accordance with the provisions of this Part, and

 
 

Banking Bill
Part 6 — Banknotes: Scotland and Northern Ireland

105

 

(b)   

in the Part of the United Kingdom in which it was authorised to issue

banknotes before commencement.

211     

Consequential repeals and amendments

(1)   

In the Bankers (Ireland) Act 1845—

(a)   

sections 9 to 23 cease to have effect,

5

(b)   

in section 26 for “except the Bank Notes of such Bankers as are hereby

authorised to continue to issue Bank Notes as aforesaid” substitute

“except banknotes issued in reliance on section 210 of the Banking Act

2008”,

(c)   

section 28 ceases to have effect, and

10

(d)   

Schedules A and B cease to have effect.

(2)   

In the Bank Notes (Scotland) Act 1845—

(a)   

every section ceases to have effect except for sections 16, 18, 21 and 22,

and

(b)   

in section 18 for “except the Bank Notes of such Bankers as are hereby

15

authorised to continue to issue Bank Notes as aforesaid” substitute

“except banknotes issued in reliance on section 210 of the Banking Act

2008”.

(3)   

The following cease to have effect—

(a)   

section 12 of the Bank Charter Act 1844,

20

(b)   

section 9 of the Currency and Bank Notes Act 1928,

(c)   

sections 1 and 3 of, and the Schedule to, the Bankers (Northern Ireland)

Act 1928, and

(d)   

in the Coinage Act 1971—

(i)   

section 12(4)(b) and (c), and

25

(ii)   

in Schedule 2 the entries relating to—

(a)   

the Bankers (Ireland) Act 1845,

(b)   

the Bank Notes (Scotland) Act 1845, and

(c)   

section 3 of the Bankers (Northern Ireland) Act 1928.

Regulations and rules

30

212     

Banknote regulations

(1)   

The Treasury shall make regulations about the treatment, holding and issuing

of banknotes by authorised banks (“banknote regulations”).

(2)   

Banknote regulations—

(a)   

shall be made by statutory instrument, and

35

(b)   

may not be made unless a draft has been laid before and approved by

resolution of each House of Parliament.

213     

Banknote rules

(1)   

Banknote regulations may require or permit the Bank of England to make rules

(“banknote rules”) about any aspect of the treatment, holding or issuing of

40

banknotes by authorised banks.

 
 

Banking Bill
Part 6 — Banknotes: Scotland and Northern Ireland

106

 

(2)   

In particular, banknote regulations may require or permit banknote rules to do

anything which banknote regulations may do.

(3)   

Banknote rules—

(a)   

may make provision generally or only for specified purposes, cases or

circumstances, and

5

(b)   

may make different provision for different purposes, cases or

circumstances.

Specific issues

214     

Backing assets

(1)   

Banknote regulations must require authorised banks to have backing assets.

10

(2)   

“Backing assets” means assets of a kind specified by banknote regulations; and

the regulations may, in particular, specify—

(a)   

banknotes issued by the Bank of England,

(b)   

current coins of the United Kingdom, and

(c)   

funds in a specified kind of account held with the Bank of England or

15

with another specified institution or class of institution.

(3)   

The regulations must—

(a)   

require banknote rules to include provision for determining the value

of backing assets to be held,

(b)   

require backing assets in the form of banknotes to be held either—

20

(i)   

by the Bank of England, or

(ii)   

at one or more locations approved by the Bank of England, and

(c)   

require backing assets held in the form of coins to be held at one or

more locations approved by the Bank of England.

(4)   

The regulations may make other provision about backing assets; including, in

25

particular—

(a)   

provision requiring a proportion of a bank’s backing assets to consist of

assets of a specified kind;

(b)   

provision about the manner in which backing assets may or must be

held;

30

(c)   

provision about ownership of and interests in backing assets;

(d)   

provision permitting backing assets to be held by an agent of an

authorised bank.

(5)   

Banknote regulations may make provision about the treatment of backing

assets in relation to insolvency; in particular, the regulations may—

35

(a)   

modify or disapply a provision or rule of law about insolvency;

(b)   

protect backing assets from being treated in the same way as other

assets of the bank;

(c)   

provide for banknotes to be exchanged by bearers within a specified

period;

40

(d)   

allow the Treasury to extend the period for exchange;

(e)   

provide for exchange to be funded from backing assets;

(f)   

provide for the Bank of England to acquire or control a bank’s backing

assets for the purpose of administering arrangements for exchange.

 
 

Banking Bill
Part 6 — Banknotes: Scotland and Northern Ireland

107

 

(6)   

In subsection (5) a reference to “insolvency” includes a reference to—

(a)   

liquidation,

(b)   

bank insolvency,

(c)   

administration,

(d)   

bank administration,

5

(e)   

receivership,

(f)   

a composition between a bank and its creditors,

(g)   

a scheme of arrangement of a bank’s affairs, and

(h)   

a process under the law of a country or territory outside the United

Kingdom which the Treasury identify, in banknote regulations, as

10

serving a similar purpose to any of the processes listed in paragraphs

(a) to (g).

215     

Information

(1)   

Banknote regulations or rules may make provision about—

(a)   

reports to be made by an authorised bank in respect of the treatment,

15

holding or issue of banknotes or in respect of compliance with

banknote regulations or rules, and

(b)   

information to be given by an authorised bank or an agent of an

authorised bank.

(2)   

Banknote regulations may make provision enabling the publication or

20

disclosure of—

(a)   

information provided in accordance with banknote regulations or

rules;

(b)   

details of anything done in contravention of this Part or banknote

regulations or rules;

25

(c)   

details of action taken under sections 218 to 221 (which may include

details of the reason for the action and its result).

(3)   

Her Majesty’s Revenue and Customs shall transfer to the Bank of England any

information acquired or held in connection with functions in respect of the

issue of banknotes in Scotland or Northern Ireland.

30

(4)   

The Bank of England may use information received in accordance with

subsection (3) only for the purposes of its functions under or by virtue of this

Part.

216     

Ceasing the business of issuing notes

(1)   

If an authorised bank at any time after commencement stops issuing

35

banknotes, it may not resume issuing banknotes in reliance on section 210.

(2)   

Banknote regulations or rules—

(a)   

may specify procedures to be followed by an authorised bank that

intends to stop issuing banknotes, and

(b)   

may apply to an authorised bank for two years after it stops issuing

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banknotes.

 
 

 
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