5 Pounds – Guernsey

In 2020, Guernsey's currency situation remained defined by its long-standing and stable framework, which is pegged to the British pound sterling (£). The States of Guernsey issues its own banknotes and coins (Guernsey pounds, £), which are legal tender on the island but not in the United Kingdom. Conversely, UK-issued sterling is accepted and circulates alongside local currency in Guernsey, creating a practical one-to-one parity. This arrangement provides economic stability and certainty for trade, given that the UK is Guernsey's primary trading partner, but it also means Guernsey has no independent monetary policy and its currency is directly influenced by the Bank of England's decisions.

The year 2020 was dominated by the economic impact of the COVID-19 pandemic, which presented significant challenges to Guernsey's financial system. While the currency peg itself remained unchallenged, the pandemic caused substantial economic disruption, affecting key local sectors like tourism and hospitality. The States of Guernsey responded with major fiscal stimulus packages, funded from reserves and borrowing, to support businesses and individuals. Crucially, the island's ability to implement such measures was underpinned by its strong public finances and the liquidity provided by the sterling link, which prevented any currency crisis or speculative pressure.

Looking beyond the pandemic, the currency situation in 2020 also operated against the backdrop of the UK's formal departure from the European Union in January. While Guernsey was not part of the EU, its economic and currency ties to sterling meant it was indirectly affected by Brexit-related volatility in the pound's external value and any shifts in UK financial regulations. Throughout the year, the currency system proved resilient, serving as a reliable anchor during a period of unique global and domestic economic stress, with no public debate or political movement towards altering the fundamental sterling peg.