Th hibraltarCh qu Ritual

Once classed by comedian Bob Hope as "one of the world's three biggest lies", the time-worn excuse that "your cheque is in the post" could become a thing of the past... If the world's high street banks have their way. The financial pendulum has already swung away from cheques and towards forms of electronic banking In the United States and much of western Europe.

A hint that scrapping cheque books could be on the cards for Gibraltar came from Gibraltar Bankers' Association president Roy Clinton at last month's "Innovations in Banking" sym posium who suggested that local customers needed education in the use of new payment sys tems.

"We have already seen the suc cessful introduction of'Chip and PIN' this year and no doubt there will be methods such as mobile phone swipe payments that have yet to reach Gibraltar," Clinton told the symposium."Old habits, it is said, die hard, but Gibraltar's high use of cheques for small retail transaction will have to change as this method becomes outdated.

Apart from the higher risks from fraud, the transaction costs for both banks and retailers will eventually make this payment method obsolete."

In Britain and on much of the continent widespread comput erisation and sophisticated IT accounting systems have reduced the need for and use of cheques, but Gibraltar has a lot of ground to cover in any game of payment catch-up. Barclays has a busi ness "platform" introduced with a fanfare and a visit of Robbie Robson and a couple of guards clutching the Premiership Cup last year, but it will not be rolled out for all businesses and private accounts until towards the end of next year.

Similarly the RBS/NatWest electronic system for accounts has some way to go before it is avail able to smaller customers. Nor are the IT systems used by all our retail banks — the main source of the cheques which fill our retail ers'tills— compatible.

So it is that every weekday morning, in an arcane and timeconsuming ritual that smacks more of Dickens than the 21st century, representatives of the Rock's main retail banks meet in the boardroom of the Cham ber of Commerce to exchange bundles of each other's cheques. Cheques drawn on Barclays and deposited in a Royal Bank of Scotland account are handed back to Barclays, cheques drawn on Jyske Bank and deposited in a NatWest account are handed back to the Jyske representative — and so on, down the line. It's a process which is time-consum ing and wasteful of labour almost certainly extending the delays between depositing a cheque and the funds becoming available in the depositor's account.

The system has close parallels with what many experts regard as the roots of modern banking. For while some banking pundits think the Romans may have invented a form of cheque more than three centuries before the birth of Christ, most historians suggest that cheques first surfaced as a type of credit note in the times of the Knights Templars(12th - 14th Centuries) who accepted gold and silver in, say, London and provided the wealthy depositor with a "note" that he could pres ent to the Templars in,say, France or Persia. These would provide the traveller with an equivalent sum in gold and silver — less their expenses. And the system worked in both directions. A Persian or French "banker" would provide a piece of paper for the traveller to swap with his counterpart in London.

The method relieved wealthy travellers of the need to risk their riches from robbers and highway men while moving from place A to place B.

And in sixteenth century Am sterdam — then a major interna tional shipping and trading centre — merchants and others who had accumulated cash began depos iting it with Dutch "cashiers," for a fee, as a safer alternative to keeping the money at home. Eventually the cashiers agreed to pay their depositors' debts out of the money in each account, based on the depositor's written order or "note" to do so.

(The first printed cheques are believed to have been issued by London banker Lawrence Childs. in 1762 .)

A move to scrap Gibraltar's daily cheque swap was consid ered by the top brass of Barclays more than a year ago — some thing that would have brought the local bank's operation into line with what is happening in the UK where electronic banking and "plastic" is replacing traditional methods.

"Scrapping cheques and cheque-books is a good idea... but it hasn't been discussed by the Association's committee and, so far, seems very much Roy's personal initiative," my source on the committee tells me. "But it is happening in the UK, and must eventually happen here."

But there are two hurdles to cross before such a development can be considered. Cheques will have to be replaced by electronic transfer and the systems in some of our banks are not yet sophisti cated enough for this. Barclays, the biggest issuer of cheque books will have its full strength IT sys tem up and running some time next year and by the end of 2007 could probably evolve a system that — for payments and clear ances — could match the RBS/ NatWest set-up, I understand.

But Government — the biggest local issuer of cheques — would have to be persuaded of the merits of a change from paper to electronics... and that could take longer...