(1) The Bank of England must make arrangements in relation to an insolvent bank to ensure that -

(a) noteholders may exchange the banknotes giving rise to their claims for an equal value of banknotes, coins or funds of such other bank as the Bank of England may specify; and

(b) the insolvent bank’s backing assets are applied for the purpose of satisfying noteholders’ claims.

(2) The reference to another bank in paragraph (1)(a) includes a reference to the Bank of England.

(3) The Bank of England shall have the right, for the purpose of such arrangements, to -

(a) take immediate control of the insolvent bank’s backing assets;

(b) exchange backing assets for other assets, and require the insolvent bank to hold those other assets as backing assets;

(c) transfer the backing assets to noteholders in satisfaction of their claims;

(d) satisfy the claims of noteholders with banknotes, coins or other funds belonging to the Bank of England and obtain reimbursement from the backing assets.