The Channel Islands
The Channel Islands are situated in the English Channel, off the coast of France, near the Cherbourg peninsula. The two largest islands are Jersey and Guernsey. Guernsey is the main constituent of the Bailiwick of Guernsey, which also includes, amongst others, the islands of Alderney and Sark.
The Channel Islands are possessions of the Crown of England and their people consider themselves British, however they do not form part of the United Kingdom. Since 933 the Islands formed part of the Duchy of Normandy but they became dependencies of the British Crown in 1066, when the Duke of Normandy became King of England.
When continental Normandy was overrun by King Philip II of France in 1204, the Islands remained in the hands of the King of England, who continued to govern them in his capacity as the Duke of Normandy until he surrendered the title in 1259. Thereafter, the British Sovereign continued to rule the Islands as though they were the Duke of Normandy, observing their laws, customs and liberties. These were later confirmed by the Charters of successive Sovereigns that secured for the Islands their own judiciaries, freedom from the process of English Courts and certain other privileges. The British Government is responsible for the foreign relations and external defence of the Channel Islands, however, in domestic affairs the Islands have for over eight hundred years, been self-governing, although insular legislation still depends finally for its validity upon orders made by the Sovereign in Council (Privy Council).
Although the Channel Islands are not members of the European Union, they have been granted a special status within the Union whereby, inter alia, they are included for the purposes of freedom of movement of goods and must apply the Common External Tariff, but they are neither subject to value added tax nor the provisions of the Treaty of Rome as to the harmonisation of taxes and social policies.
All of the United Kingdom clearing banks have branches in the Islands and many other banks from all over the world also have representation. There is no exchange control in Guernsey and currencies are freely transferable. The local currency is the pound sterling.