Pound

The pound sterling is the currency of the United Kingdom, the counterpart of the dollar in the United States, and its symbol is £. However, the pound is worth more than a dollar, with the conversion rate fluctuating around 2 dollars to a pound as of the end of 2006.

The pound is by far the oldest currency in the world still in existence, having been introduced by King Offa of Mercia, ruler of England, around the year 790 AD. The term 'pound' referred to the fact that it was a pound in weight of silver, divided into 20 shillings, with each shilling divided into 12 silver pence (which were themselves further subdivided into farthings, of which there were 4 to the penny; for even smaller amounts the farthings were also sometimes divided into 'fourth-farthings'). Since that time the pound has remained remarkably stable, but over the centuries a certain amount of inflation has occurred, to the effect that a pound in 790 AD would have the buying power of about 38 pounds today. This compares very favourably with other world currencies such as the German Mark which underwent billion-fold inflation in a space of just a few years in the 1920s and had to be scrapped altogether.

Today, the pound remains the third most important currency in the world in terms of international reserves, after the Dollar and the Euro, and ahead of the Yen.