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Clause 195

Banking Bill – in a Public Bill Committee at 6:00 pm on 28th October 2008.

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Question proposed, That the clause stand part of the Bill.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I have a brief query for the Minister. The clause relates to the definition of “issue”. The explanatory notes state:

“The definition ensures that a banknote is regarded as issued once it enters circulation, even if it enters circulation in error or as a result of theft.”

I assume that the reason is that a note issued in that way still needs to be treated as issued to protect the position of noteholders. There could be a mismatch for the protection of noteholders. Was equivalent protection provided under the old regime?

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

The hon. Gentleman has alighted on one of the points that we were keen to modernise in the legislation around commercial issuance of the banknotes, to ensure that there was no ambiguity about which existing notes could be regarded as issued for the purpose of backing assets. He has discovered immediately one of the areas of ambiguity that we seek to put right, and he is right to point out to the Committee why it is important to do so. If a note has been issued accidentally or because of theft, it is still a promise to the individuals using it, and it needs to be backed by the appropriate assets.

The hon. Gentleman is quite right. He has alighted on an ambiguity, and he has pointed out why it needs to be made unambiguous. That is what the clause will do.

Question put and agreed to.

Clause 195 ordered to stand part of the Bill.