Manx pound

The Isle of Man is in a one-sided de facto currency union with the United Kingdom: the Manx government has decided to make sterling currency legal tender on the island, and to back its own notes and coins with Bank of England notes.[2]

Manx government notes may, on demand, be exchanged at par for Bank of England notes of equivalent value at any office of the Isle of Man Bank.[1] All notes and coins that are legal tender in any part of the United Kingdom (e.g. Bank of England notes) are legal tender within the Isle of Man.[1]

Unlike Northern Irish and Scottish notes, the UK does not require the Isle of Man government to back the Manx notes and coins with Bank of England notes or securities. There is no restriction under British law on the number of notes and coins they may issue, but equally Manx notes are not legal currency in the UK as they have not been approved by the British Parliament.[3] The notes and coins are not underwritten by the UK government or the Bank of England, and there is no guarantee of convertibility beyond that given by the Manx authorities.[4] However, the requirement in the island's Currency Act 1992[1] for the Isle of Man Treasury to exchange Manx Pound banknotes on demand for Bank of England notes in practice restricts the issue of unbacked currency, and the aggregate total of notes issued must be pre-approved by Tynwald.[1]

ISO 4217 does not include a currency code for the Manx pound, but the abbreviation IMP may be seen.[5] ("IM" is the ISO 3166-1 alpha-2 code allocated to the Isle of Man.)

The first Manx coinage was issued privately in 1668[6] by John Murrey, a Douglas merchant, consisting of pennies equal in value to their English counterparts. These "Murrey Pennies" were made legal tender in 1679, when Tynwald outlawed the unofficial private coinage that had been circulating prior to and alongside John Murrey's pennies (English coinage was also allowed by this Act).

Due to the difficulty of maintaining the supply of coins on the island, in 1692, the Manx coinage was debased, with sterling crowns circulating at 5 shillings 4 pence, half-crowns at 2 shillings 8 pence and guineas at 22 shillings. At that time, Tynwald also forbade the removal of money from the island, in an attempt to maintain supply.

In 1696, a further devaluation occurred, with all English silver and gold coins valued at 14 Manx pence for every shilling. Between 1696 and 1840, Manx copper coins circulated alongside first English, and later British silver and gold coins at the rate of 14 pence to 1 shilling. As in England, there were 20 shillings to the pound. Thus, after 1696, £100 sterling was worth £116 13s 4d Manx.

In 1708, the Isle of Man Government approached the Royal Mint and requested that coinage be issued for the island. The then Master of the Mint, Sir Isaac Newton, refused. As a result, the first government issue of coins on the island was in 1709. This coinage was made legal tender on 24 June 1710. In 1733 Tynwald prohibited the circulation of any "base" (not silver or gold) coinage other than that issued by the Government.

Because of the similarity between Manx and British coins, it was profitable to change shillings to Manx coinage and pass it off as British currency in Great Britain, making a profit of £2 for every £12 in Manx coinage so transferred. This happened on such a scale that by 1830 the island was almost totally deprived of copper coinage.

In an attempt to resolve this problem, a proposal was introduced to abandon the separate Manx coinage in favour of British coins. This was rejected by the House of Keys in 1834, but they were overruled by the British government in 1839. An Act was passed declaring that "… the currency of Great Britain shall be and become, and is hereby declared to be, the currency of the Isle of Man", and this remains Manx law to this day. This change was resented: some islanders felt defrauded, and there was serious rioting in Douglas and Peel. These were known as the "Copper Row" riots, and were put down by the Manx militia.

The Royal Mint issued a total of £1,000 in copper coins. Following Tynwald's passing of the Copper Currency Act 1840,[7] these were valued at 12 pence to the shilling. All coins issued before 1839 were declared by this law to be no longer current, and were recalled by the Board of Customs and exchanged by the Royal Mint at their original nominal value for the new coinage. After 1839, no further Manx coins were issued, and they gradually became scarce and were replaced in general circulation on the island by the coinage of the United Kingdom. They did not cease to be legal coinage on Mann until decimalisation in 1971. Banknotes had been privately issued for the island since 1865.

In 1971 the United Kingdom moved to a decimal currency, with the pound subdivided into 100 pence. The Isle of Man Government, having issued its own banknotes for ten years, took the opportunity to approach the Royal Mint and request its own versions of the decimal coins, which were introduced in 1971.

In 1865, the Isle of Man Banking Company was founded and began issuing £1 notes, with £5 notes introduced in 1894. The bank changed its name to the Isle of Man Bank in 1926. Other banks that issued notes (£1 only) on the Isle of Man were:

The Isle of Man Government Notes Act revoked the banks' licences to issue banknotes as of 31 July 1961.[10] The Isle of Man Government started to issue its own notes, in denominations of 10/-, £1 and £5, on 3 July 1961. In 1969, the 10/- note was replaced by a 50 new pence note in the build-up to decimalisation. £20 notes were introduced in 1979. A polymer £1 note was introduced in 1983 but discontinued in 1988. A £50 note was also introduced in 1983. The 50p banknote was withdrawn in 1989. Legal tender status (the IOM's definition of which is akin to the UK) of the 10/-, 50p and £1 polymer notes continued until 31 October 2013, and these notes remained in circulation (albeit rarely seen) until this date, after which they remain exchangeable at branches of the Isle of Man Bank.[11]

The Isle of Man continues to issue a £1 note in addition to the £1 coin (in the UK, the £1 note has now been discontinued, save in Scotland).

The front of all Manx banknotes has a pledge to honour the banknotes (the "promise to pay the bearer on demand") in the name of the Isle of Man Government, and features images of the previous Lord of Mann, Queen Elizabeth II (not wearing a crown), and the triskelion (three legs emblem) and motto.[12] The triskelion symbol is also used as a watermark. Each denomination features a different scene of the Island on its reverse side:[13]

• £1 – Tynwald Hill
• £5 – Castle Rushen
• £10 – Peel Castle
• £20 – the Laxey Wheel
• £50 – Douglas Bay

It was the Manx Government's position that, if the United Kingdom had decided to participate in the euro, then it would be likely that the Island would also choose to participate. Primarily this was because most of the Island's trade is with the United Kingdom and other countries of Europe, and the break-up of the existing currency union with the UK would cause economic harm to the Island. There was also concern that the island's economy is not large enough to withstand attack by currency speculators if the Manx pound became a stand-alone free-floating currency.[14][15]

"The idea that the Isle of Man could manage its own currency, for example, with all the difficulties and pitfalls this would involve, is not a viable option."

— Jeremy Peat, Royal Bank of Scotland

Tynwald passed the Currency Act 1992[1] as part of preparations in the event that the UK decided to adopt the euro. In such a scenario, the Isle of Man wished to retain the right to issue its own currency, believing it to be an important public statement of independence. Retaining the island's own coinage also enables the Isle of Man Treasury to continue to benefit from the accrual of interest on the issued money (seigniorage). The Currency Act allows for the issue of a Manx euro currency at parity with the euro, referred to as a "substitute euro", which has an Isle of Man inscription on the obverse side of the coins. This proposal would essentially have replaced the "substitute sterling" with a "substitute euro", as they would have functioned in the same way. Manx versions of the euro coins and euro banknotes were designed.[16]

While the European Union is not obliged to accept the Manx desire to introduce a special Manx version of the euro, the Isle of Man could arguably introduce a currency pegged to the euro (akin to its situation now vis-à-vis sterling, or the relationship between the euro and the Bulgarian lev). There is no precedent for divergent national versions, beyond customising the national side of euro coins in the same way as other eurozone members.

If, after converting to the euro, the exchange rates set by the European Central Bank were to cause economic harm to the Isle of Man, then there would be no eligibility for compulsory funding under Protocol 3 of the Maastricht Treaty, as there would have been for the UK.

In March 1998, the Isle of Man Treasury expressed some concern that if the island adopted the euro along with UK, then the elimination of the risks of currency exchange for the European mainland would increase the attractiveness of the island as a tax haven. This could potentially lead to political pressure from European politicians for the island to legislate against this. On the positive side, the introduction of a Manx euro was expected to benefit Isle of Man manufacturers and tourism by the removal of currency exchange costs for customers and tourists from the eurozone. The latter was also believed to increase the level of competitiveness on the Isle of Man, due to an increase in European businesses, which would benefit the Isle of Man economy.[16]

• Economy of the Isle of Man
• Commemorative coins of the Isle of Man
• Alderney pound
• Guernsey pound
• Jersey pound

• Heiko Otto (ed.). "The banknotes of the Isle of Man" (in English, German, and French). Retrieved 1 August 2019.