Back in July 2005 when he was Chancellor of the Exchequer, Gordon Brown threatened to squeeze the Scottish and Northern Irish banks of issue for an additional £80 million a year in seigniorage by making the 100% reserve requirement (in non-interest-bearing Bank of England liabilities) against their banknotes continuously binding. Today Brown is Prime Minister, and his Chancellor, Alistair Darling, has renewed the threat with the spurious rationale that it would “protect customers from failing financial institutions”. (News story here.) So much for the proud tradition of Scottish and Northern Irish banknotes. Scotland's first minister is vowing to fight the change.

And some "consumer protection" measure: with zero seigniorage left for the issuing banks, the banks would be forced to start imposing fees for note withdrawals from cash dispensers or ATMs (fees are currently zero because the banks want the float from non-interest-bearing notes in circulation). Would that make consumers better off?