Slugger O'Toole

Conversation, politics and stray insights

“If I were Scottish, I would not dream of accepting such an arrangement…”

Thu 13 February 2014, 8:35am

Martyn Wolf in the FT has been mulling over last week’s statement from the Governor of the Bank of England in relation to any future changes in the currency union between Scotland and what would be left of the UK after independence:

Mr Carney failed to bring out two differences between the eurozone and a currency union between Scotland and the rest of the UK. One is that the rest of the UK generates 90 per cent of UK gross domestic product. The other is that the UK is already a fiscal and financial union. A move towards currency union would reduce the pooling of resources.

He continues:

The first point means that insurance would go one way: the rest of the UK could insure Scotland, but Scotland could not insure the rest of the UK. The rest of the UK would know it was on its own. Scotland would not. The need for external fiscal and financial discipline would go one way. This could not be a relationship among sovereign equals.

The second point means that the post-independence travel would be towards making the currency union less effective: smaller fiscal risk-sharing; less certainty about the handling of crisis situations; and, not least, less certainty over where the accountability of the BoE would lie.

And finally:

It must be an asymmetrical union. The BoE would remain subject to the law of the rest of the UK. It would not contain regional representatives. It would have sole responsibility for prudential regulation. Above all, the rules of the union would impose fiscal discipline upon Scotland. But such discipline would essentially be voluntary for the rest of the UK.

If I were Scottish, I would not dream of accepting such an arrangement because it would be far more unequal than the present one. But it is the only arrangement the rest of the UK should accept in return for participating in a worse monetary union than today’s. Mr Carney could not say anything like this. But the Scottish people should not be allowed to believe they can have whatever kind of currency union they want. It would find another and far bigger partner on the other side of the table.

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Comments (50)

  1. Count Eric Bisto von Granules (profile) says:

    Mark this as the day the yes vote won. Three English public school boys coming together to tell the Scots that its not a union, its English money and if you don’t play by our rules we will make sure you can’t play at all. I fully expect the Scots to tell them where to stick their rules

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  2. Charles_Gould (profile) says:

    Martyn Wolf is a very highly regarded commentator. His argument is well presented. If you have any issue with the argument, then counter it.

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  3. Neil (profile) says:

    The negotiations have begun. Better late than never. There’s nothing to stop England refusing currency union, but then there’s nothing to stop Scotland saying that they have contributed to the assets of Britain and the value of sterling so in the absence of their fair share of the goodies, they won’t be having their fair share of the debt. They can use sterling unofficially as a stop gap, or have their own currency pegged to sterling while they negotiate their way into the Euro. It’s all to play for, and every passing day seems to make Scottish independence more likely. Poor old Danny will never be elected again.

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  4. Son of Strongbow (profile) says:

    Wolf’s argument is only stating reality. How could a monetary union between the UK and an independent Scotland ever be a partnership of equals?

    If a financial crisis occurred in Scotland the UK could offer a bail out. The same could not be said if the situation was reversed. This is the difference between any proposed monetary relationship on the island of Britain and the Eurozone; within the Eurozone the bet is hedged.

    In these circumstances it will of course be the UK that sets the rules. How could it be otherwise?

    Btw what’s the problem with public school boys (or girls) ?

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  5. Charles_Gould (profile) says:

    This is the nub of the argument:

    “Above all, the rules of the union would impose fiscal discipline upon Scotland. But such discipline would essentially be voluntary for the rest of the UK. If I were Scottish, I would not dream of accepting such an arrangement because it would be far more unequal than the present one.”

    Very interesting. Scotland bound by the rule. Rest of UK makes the rule.

    The other option is Scotland having its own currency pegged to the Pound. But that would come under speculative attack, especially hard to maintain when there is exogenous variation with shocks to oil price.

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  6. Mick Fealty (profile) says:

    Neil,

    Wake up mucker. All Mr Wolf is pointing out is that this is how Ireland allegedly lost its economic sovereignty. All else is detail.

    When the inevitable storm comes, Scotland will come second to protecting rUK in exactly the same way Ireland Greece, Portugal, Spain and Italy did to German and French banks.

    Plus as Wolf also says, Salmond’s hedging of his long term bets on Scotland’s membership of this putative currency union means the contract won’t last the first serious flurry of speculation.

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  7. Mick Fealty (profile) says:

    This is true:

    “They can use sterling unofficially as a stop gap, or have their own currency pegged to sterling while they negotiate their way into the Euro.”

    True, but it ain’t no currency union. For instance, who’ll be covering the massive Scottish financial services sector in the meantime? All things are possible of course.

    If you look at the current account figures, independence will work fine for Scotland, but only after they can negotiate their way past some very large and potentially hostile interests.

    Wolf picks out this from the Scotland’s future document:

    “An independent Scotland will be able to decide our currency and the arrangements for monetary policy.”

    Now, here’s Hugo Dixon (http://goo.gl/vpeqGh):

    One can understand why Edinburgh is keen not to change its monetary arrangements. If Scotland had its own free-floating currency, it would be less economically integrated with the rest of the UK. Given that 60 percent of its exports and 70 percent of its imports are with the rest of the UK, such a separation would hit hard.

    A separate currency would also cause trouble for the outsized Scottish banking sector. Banking assets are more than 12 times GDP – nearly double the ratio for Iceland, Ireland and Cyprus before their banking industries blew up. The Scottish people might also worry that a Scottish currency could fall in value, devaluing their savings.

    Joining the euro might not be any better. Like a separate currency, the euro would complicate Scottish trade with the UK, and the euro zone might be unhappy with Scotland’s relatively gigantic banks. Added to that, the euro has suffered years of terrible publicity, so promising to join it wouldn’t be a vote-winner.

    No wonder Alex Salmond, Scotland’s first minister, is pledging a currency union with the rest of the UK. The snag is that such an arrangement would be virtually impossible to negotiate. Mark Carney, the Bank of England’s governor, gave some of the background thinking in a speech in Edinburgh last week.

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  8. Son of Strongbow (profile) says:

    It would be good if these realities were properly addressed by the ‘Yes’ campaign. Unfortunately I don’t think they will be. Already I’ve seen the tired response that raising these matters is ‘scaremongering’.

    There seems to be a large element in the ‘Yes’ campaign that is characterising the vote for independence as simply a vote against the Tory party epitomised by the character, and more particularly the background, of David Cameron.

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  9. Turgon (profile) says:

    The SNP appear to feel that this debate is a win win for them. If a currency union had been accepted it would have allowed them to continue with the pretence that a vote for independence would essentially be devo max with benefits: independence-lite. Happy independent Scotland but nothing else would change. Indeed it looked possible that independence would have granted all those things.

    Now that the Westminster Parties have pointed out that it would not be like this the SNP can accuse them of scaremongering and panic at the prospect of independence. They can also raise the idea of posh Tories etc. and play up the emotional aspects of potential independence.

    As the economists have pointed out a currency union would seem to be a bad idea for rUK and also for Scotland so they essentially had to point this out yet can fall into the SNP’s other trap.

    However, all this assumes that the Scottish public will believe Salmond’s interpretation of these events and not the other commentators. These events might well produce a spike in pro independence feeling at the moment but come the election people may vote with their heads and support the union. The validity of the polls on this issue will be interesting to watch. Maybe people underplay their support for independence but they may have exactly the opposite position and with the current excitement and fervour drummed up over this issue an emotional claim to support independence followed by a hard headed vote against it looks a very possible outcome.

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  10. socaire (profile) says:

    Interesting comment from you,Turgon, who comes from a community that swore to ‘eat grass’ rather than give up the blue skies of ‘Ulster’, As Solshenytzyn’s dog says ” to hell with your bone! I want my freedom”. Of course, if this is a purely economic fight and the Scots are happy with this, then the outcome is a foregone conclusion. Where’s their national pride then? Don’t put your begging bowls awa’ yet.

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  11. Turgon (profile) says:

    socaire,
    Attempting to analogise potential Scottish independence to that of Northern Ireland (or the RoI) is extremely flawed. Something even Gerry Adams seems to have accepted.

    If there were a close anology (not that I think there is one) it would be better between nationalists in Northern Ireland and those in Scotland supporting independence. After all both would be those purporting to support leaving the UK.

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  12. grandimarkey (profile) says:

    @Count Eric Bisto von Granules

    “Mark this as the day the yes vote won.”

    Agreed.

    @Turgon

    “The SNP appear to feel that this debate is a win win for them”

    Agreed. However, it’s not just the SNP, it’s the entire Yes Campaign.

    This is just another stunning political miscalculation from the No side for three reasons:

    1. Who decided to make this public 7 months before the vote? 7 months is ages in politics. This gives the Yes campaign 210 days to explain the benefits of using the pound with no currency union. Madness.

    2. This is it. The No side don’t have any more tricks up their sleeve.bI’m sure we’ll see some dirty tricks closer to the vote but every poll on independence so far has shown that the economy is the most important issue for the Scottish people. This is the last major economic political manoeuvre that the No side have. And it isn’t even that good.

    3. Appearance is everything. 3 London based politicians telling the Scots what they can or can not do? It’s already going down well.

    Osborne cannot prevent Scotland from using the Pound. That’s a fact. It’s whether there will be a currency union or not. This politicking was predicted…

    When Osborne first tried his sabre-rattling over currency, Professor David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, put things in the right perspective: “There are clearly things to be worked out but a lot of this sounds like political posturing rather than economics”.

    Before that, the expert economists on the Fiscal Commission Working Group had cautioned “it is important to acknowledge that political considerations will play a role and may cloud pre-referendum comments and policy statements. However, these are likely to differ from the actual decisions taken post-referendum when agreement is likely to take place where there are common interests”.

    Even Danny Alexander, Osborne’s side-kick said prior to Osborne’s first round of sabre rattling “I have no doubt that both the UK and Scotland would – if it came to it – negotiate Scotland’s independence in a responsible manner”. Alistair Darling has described a currency union as “logical” and “desirable” in the event of independence.

    So there is every chance that this is a load of bollocks from Osborne. We’ll just have to wait and see after the Yes vote is carried.

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  13. grandimarkey (profile) says:

    In fact lets have a look at what the research director of the Adam Smith institute has to say on Osborne’s ridiculous plan to pull out of a currency union…

    Sam Bowman, research director at the Adam Smith Institute, a free-market liberal think-tank, “An independent Scotland would not need England’s permission to continue using the pound sterling, and in fact would be better off using the pound without such permission.

    “There is very little that an English government would actually be able to do to stop Scottish people from continuing to use the pound sterling if they wanted to.”

    So just confirming what we already know there, England can’t prevent Scotland using the pound.

    “Scotland’s position would be closer to that of countries like Panama, Ecuador and El Salvador, which use the US dollar without American ‘permission’, and, according to research by the Federal Reserve of Atlanta, consequentially have far more prudent and stable financial systems than if they were part of a formal currency union.

    “An independent Scotland that used the pound as its base currency without the English government’s permission, with banks continuing to issue notes privately and private citizens free to choose any currency they wanted, would probably have a more stable financial system and economy than England itself.”

    Not bad.

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  14. grandimarkey (profile) says:

    @Son of Strongbow

    “It would be good if these realities were properly addressed by the ‘Yes’ campaign.”

    Well, in fairness, they have. You just haven’t bothered to look it up.

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  15. Mick Fealty (profile) says:

    grandimarkey,

    Are we talking about the same thing? The issue is currency union, not independence as such.

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  16. Greenflag (profile) says:

    Odd that nobody has mentioned the Irish Pound/Punt connection with Sterling since the State’s independence .

    The Irish Punt established by the Currency Act 1927 had a fixed link with Pound Sterling until March 1979.

    Why could Scotland not have a similar arrangement ?

    Ireland joined the European Monetary System (EMS) which began operation on 13th March 1979. Initially the Irish Punt kept parity with Pound Sterling but on 30th March 1979 the link was broken when sterling broke the fluctuation limits set for the Irish Punt.

    Note Sterling broke the fluctuation limits – a case of the devaluations again so much for lost savings .

    Hugh Dixon’s quote :

    ‘If Scotland had its own free-floating currency, it would be less economically integrated with the rest of the UK. Given that 60 percent of its exports and 70 percent of its imports are with the rest of the UK, such a separation would hit hard.’

    Ireland was no less economically integrated with the UK in the period 1922-1979. Even after the Punt’s free float exports and imports to and from the UK continued to increase in absolute terms ,

    Scotland’s dependency on the rest of the UK i.e the 60% and 70% mentioned by Dixon is a a lot less than the Irish Republic’s dependency was back in 1973 when almost 90% of imports and Exports were to and from the UK.

    As to

    “A separate currency would also cause trouble for the outsized Scottish banking sector. Banking assets are more than 12 times GDP – nearly double the ratio for Iceland, Ireland and Cyprus before their banking industries blew up.”

    And who is to say that those RBS assets are not overvalued just as those in Iceland /Ireland were? RBS have the answer for that anyway as they’ve already stated they will upsticks and move to London if Scotland votes Yes . Indeed the will they’ll want the unfortunate English taxpayer to foot another RBS bailout when it comes :(

    ‘Joining the euro might not be any better. Like a separate currency, the euro would complicate Scottish trade with the UK,”

    It did’nt complicate trade between the UK and Ireland and there was even more dependency in that situation back then and even today . Why would Scotland’s case be any different ?

    As to Dixon’s

    ” the euro has suffered years of terrible publicity, so promising to join it wouldn’t be a vote-winner.’

    Mr Dixon is behind the times . While some of that publicity was justified a lot of it was the usual anti EU spin beloved of sections of the British media . We no longer see the headlines of Eurozone imminent collapse anymore .. Why not ? In fact it’s quite the opposite .Scots are more likely to lose the value of their savings by remaining with Sterling than by joining the Eurozone .

    Naturally Chancellor Osborne has weighed in with his shot across the bows of the trending Yes voters with his

    ‘No legal reason to share UK pound with independent Scotland ‘

    http://www.rte.ie/news/2014/0213/504065-scotland-independence-referendum/

    A million plus British jobs are dependent on the Irish economy and while I don’t have any figures I would imagine given the high percentage of trade dependency between England and Scotland that a similar number of English jobs would be ‘dependent’ on Scotland .

    So it’s in England’s economic interest to ensure that whatever decision Scotland takes those interests will be minimally affected . All the Scots are trying to achieve is the same .

    In that context Wolf’s article and the Chancellor’s headline can be seen as upping the ante in the referendum campaign which shows the No vote side in some disarray and failing to convince .

    A week is a long time in any election campaign – 6 months is an eternity . He who panics first often loses .

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  17. Count Eric Bisto von Granules (profile) says:

    Spectacularly missing the point here. English political establishment from London is using ‘hard power’ to tell the Scots what they cant do, when they should be using ‘soft power’ to raise questions and uncertainty in the electorates mind. The fact they’ve moved away from the former to the latter indicates a lack of confidence on their own part. It also makes it very clear to the Scots that it is not a union of equals.

    There is nothing outlandish in what Martin Wolf asserts. However, equally, there is nothing off the wall in the counter arguments. But what you have here is up front, naked scaremongering, threatening language that will rub any undecideds with a spine up the wrong way.
    The argument may centre around the economy up until the perceived arrogance from London overtakes the logic and the passions are raised. Camerons speech, followed by the Davids and Nicks ‘Ye cannae’, with the desperation of an outright negative campaign to vote no have sealed this for a yes win.

    As we get closer to the election date, cold calculations will give way to gut feelings amongst the undecideds. Given the current output of the No campaign, this will not play to them

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  18. socaire (profile) says:

    Turgon, it was the LUP community who said that eating grass ie financial ruin was better than Rome Rule. So there are more considerations than money.

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  19. Son of Strongbow (profile) says:

    So Salmond is arguing for a monetary union even though simply holding onto the pound makes better sense?

    Perhaps the Yes campaign needs a better leader? If Salmond is fixated on unnecessary ‘foreign’ entanglements (monetary union with London, not to mention Scottish sovereignty being based in Brussels) should his independence bonafides be questioned?

    Could he be an ‘English’ fifth columnist?

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  20. grandimarkey (profile) says:

    @ Son of Strongbow

    “Perhaps the Yes campaign needs a better leader?”

    Salmond isn’t the leader of the Yes campaign.

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  21. grandimarkey (profile) says:

    @Mick

    “Are we talking about the same thing? The issue is currency union, not independence as such.

    Most of my above posts are with reference to the Currency Union. Hence the references to Economists speaking on the matter.

    However, I suppose you cannot separate Osborne’s latest outburst from the real politicking of the independence campaign. They’re one and the same. As I’ve pointed out, leading economic figures on the No side have stated that a currency union would be “logical” and “desirable”. Why would Osborne not want such a desirable (for the rUK) outcome? Or is this all a political manoeuvre and in the event of a Yes vote being carried the rUK would enter into a Currency Union regardless of what Osborne has said today…? I’d bet on it.

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  22. Mick Fealty (profile) says:

    Grandimarkey,

    “7 months is ages in politics. This gives the Yes campaign 210 days to explain the benefits of using the pound with no currency union. Madness.”

    To explain a forced switch in policy? Remember, “if you’re explaining, you’re losing.”

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  23. Neil (profile) says:

    http://www.scotsman.com/news/analysis-benefiting-the-uk-is-most-logical-option-1-3304617

    Here’s a Nobel Prize winning economist’s view. This is all ‘project fear’ nonsense, first step is getting independence, then the real negotiations can begin. iScotland has options.

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  24. Mick Fealty (profile) says:

    It could be, but I think there are certain fixed objects there that need serious grappling with. There’s way too much of a ‘make it so’ approach to what are actually very tough choices ahead.

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  25. Greenflag (profile) says:

    ‘Or is this all a political manoeuvre’

    At this stage it certainly looks like it – might have something to do with the closing gap in the polls .

    ‘in the event of a Yes vote being carried the rUK would enter into a Currency Union regardless of what Osborne has said today…? I’d bet on it

    That would be an odds on bet .The rUK can afford to p*** off the Scots but not by that much . Theres interdependency of interests even if the rUK economy would be several times larger than Scotlands.

    Will be interesting to see Scots reaction to the latest effort from the No campaign .

    No doubt as September approaches there will be more of same . But Bannockburn it won’t be ;)

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  26. Greenflag (profile) says:

    Chancellor Osborne’s method of love bombing the Scots seems markedly different from Mr Cameron’s .Do they not belong to the same party and sit at the same Cabinet table ?

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  27. Barnshee (profile) says:

    Scotland is a client region of England.
    England will heave a sigh of relief if/when Scotland goes for\ broke for broke it sure is. England will -rightly- make sure that independence means exactly that.
    [Text removed - mods]

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  28. GEF (profile) says:

    I can’t make these Jocks out. Surely if they want independence from England surely they should also be delighted to have their own currency. Or change over to the Euro if Brussels will have them.

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  29. Count Eric Bisto von Granules (profile) says:

    For the last 100 years England has proved itself to be one step behind the zeitgeist, and so it proves to be again.

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  30. grandimarkey (profile) says:

    @ Barnshee

    “England will heave a sigh of relief if/when Scotland goes for\ broke for broke it sure is.

    And what exactly are you basing this on? The millions upon millions being pumped into Better Together? Or perhaps the impassioned pleas by high-ranking Tories for the Union to be maintained. Scotland is a NET contributor to the Union, it puts more money into it than it gets back. The subsidy myth has been exposed time and time again, not even the Tories are using that one now. Get with the times.

    England will -rightly- make sure that independence means exactly that.”

    Luckily for Scotland, that isn’t England’s decision. England doesn’t have the power to ‘make independence exactly that’. They can’t even stop Scotland from using the pound.

    @GEF

    “I can’t make these Jocks out. Surely if they want independence from England surely they should also be delighted to have their own currency. Or change over to the Euro if Brussels will have them.

    Well, you see, independence and national sovereignty aren’t exactly as black and white as that (except in NI perhaps). If keeping the pound makes more economic sense then why ditch it? Scotland wants to create the best socio-economic system for herself and will do so within her remit. So, while the idea of having ones own currency is a nice one, if it doesn’t make as much economic sense as keeping the pound, well then, why choose the less viable option?

    @Mick

    To explain a forced switch in policy? Remember, “if you’re explaining, you’re losing.”

    Expect the response from the Yes camp to be calm and measured. The pound is a shared asset, that’s the line and it will be stuck to. The Yes campaign knew this was coming, they’re just surprised that the No side have jumped so early. Panic stations anyone?

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  31. Mick Fealty (profile) says:

    Grand…

    Maybe so. But that line from Scotland Forward suggests they only tumbled that after the doc was published.

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  32. Greenflag (profile) says:

    @ CEB von G ,

    ‘For the last 100 years England has proved itself to be one step behind the zeitgeist,’

    In relation to Irish /NI affairs probably true . In relation to 1939 -45 being out of step with the then ‘zeitgeist ‘ is something that we should all be grateful for or no?

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  33. Count Eric Bisto von Granules (profile) says:

    Greenflag – I dont think coming to an agreement (peace in our time) with the forces arrayed before them on outbreak of world war 2, 11 months earlier could ever be described as prescient forethought. To illustrate the point, they could and should have chopped Hitler off at the diddlies in the Ruhr, Austria, Sudetenland etc but they didnt because they see where it was going.
    Thats not to say, their sacrifices werent worthwhile or something not to be grateful for, but clearly illustrates that the english have a very poor reading of situations outwith their borders and sometimes within.

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  34. Mick Fealty (profile) says:

    I hope it has dawned on people that the two comments above are not from party hacks. Alex Massie is seeing denial on “a bad, black day for the Scottish independence movement. I know that Alex is a committed No, but I think his reading is deadly accurate!

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  35. sherdy (profile) says:

    Maybe Mad Max Keiser isn’t so mad after all.

    He reckons that trying to stick with Sterling or going begging to join the Euro would seriously handicap a newly independent Scotland.

    He refers to the fact that Bitcoin can suddenly appear out of nowhere, with no physical backing, then Scotland, with her natural reserves and abilities could introduce their own currency.

    How would the Jock equate with the £ or €? Hopefully they would not be jockstrapped?

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  36. Kensei (profile) says:

    There is no reason why a currency union couldn’t be negotiated – there are pros and cons but the fiscal restrictions might well be worth it for having the Bank of England as lender of last resort. It depends how onerous those conditions are, and how rigidly they are enforced. Are we going to pretend that the Stability and Growth Pact was obeyed by everyone?
    Secondly, it’s easy to say the smaller countries were stream rollered in the Eurozone and there is a lot of truth in it. But at the same time, Ireland could have caused absolutely humongous problems for the bigger economies if they refused to go along. Plus given the oil that an independent Scotland would have, it would have an outsized impact on the balance of payments. So it’s not quite as asymmetrical as made out.

    But fine, let’s assume it’s out. There are a number of options

    (1) Just use sterling anyway, and keep reserves as needed. Might be a sensible idea in the short term, avoids problems with conversion costs but will tie up reserves and will hit a wall if you hit a really, really big financial problem

    (2) Scottish pound pegged to the pound at 1:1. Minimises transaction costs, you can just cut the peg under severe pressure and helps with inflation. But you lose rate setting as a tool and you might need more capital controls.

    (3) Euro. Application, and see Ireland (Republic of)

    Essentially there are no perfect currency regimes. They all have pros and cons; it’s not clear to me that formal union is best but it doesn’t strike me as inherently worse as any other. Alex Salmond obviously knows this.

    The argument over the pound is essentially political. For years Scottish passports and the Scottish pound were useful fear mongering tools for unionists. Sterling itself is popular, as can be seen with the Euro. It is also a very visible change. The SNP want to retain it to make people more comfortable – I suspect they’d have a real debate on currency within an independent Scotland. Unionists want to make it an issue to unnerve people. Can we stop pretending there is any real economic debate going on?

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  37. Greenflag (profile) says:

    @ CB von G ,

    ‘ the english have a very poor reading of situations outwith their borders and sometimes within.’

    I’d hesitate before I’d make such a broad generalisation . You would only have mention Cowan , Lenihan or the Bert for me to note that the ‘English ‘ have company in that respect :( Had you said NI Unionist politicians I could agree 98% !

    ‘they could and should have chopped Hitler off at the diddlies in the Ruhr, Austria, Sudetenland etc’

    Hindsight -many Germans even then thought Hitler would’nt last long and that the Wehrmacht or financial establishment would see to his demise . HMG was listening to the wrong Germans .

    Anyway best not distract the main thread here.

    Scots wha hae and all that !

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  38. Charles_Gould (profile) says:

    Scots dollar will be sensitive to oil price and suffer Dutch disease?

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  39. Barnshee (profile) says:

    “And what exactly are you basing this on? The millions upon millions being pumped into Better Together? Or perhaps the impassioned pleas by high-ranking Tories for the Union to be maintained.”

    Reluctant Tories turning up and mouthing half hearted platitudes ? hardly positive

    “Scotland is a NET contributor to the Union”

    Facts please-(there is no such thing as “Scottish oil” its own by the Petroleum giants)

    Stop yer ticcklin joak

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  40. grandimarkey (profile) says:

    @Barnshee

    Facts please

    You should really look this stuff up yourself. But indeed a cursory glance on google reveals plenty of information on the subject.

    (there is no such thing as “Scottish oil” its own by the Petroleum giants)

    Well, there is. It is all about where the North Sea oil receipts go to. Under an independent Scotland they would resort to Edinburgh rather than London.

    There’s a reason even Unionists aren’t saying that Scotland can’t afford to be independent. Because that argument has been shown to be false time and time again.

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  41. Charles_Gould (profile) says:

    Grandimarkey r u a scot nat?

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  42. grandimarkey (profile) says:

    I’m not from Scotland originally but I’ve lived in Glasgow for 8 years. I intent to vote Yes and have volunteered for the Yes campaign.

    So I suppose I am.

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  43. Comrade Stalin (profile) says:

    Couple of comments.

    Firstly it seems unlikely that the Scottish nationalists did not anticipate the announcement today. I don’t think it is a major setback to their campaign at all. I’m not, at the moment, massively convinced that the Scots will vote for independence in any case but that’s neither here nor there.

    Secondly I think there is an element of scaremongering here. The Irish republic operated up until the end of the 1970s using a currency which was 1:1 exchangeable with sterling (which meant that sterling was accepted throughout Ireland). With the Bank of England controlling interest rates it obviously means you face some limitations concerning economic policy but given how the Chancellor happily admitted that 90% of the UK’s GDP does not even come from Scotland it does not follow that it would figure highly in the Bank’s considerations anyway.

    It’s suggested above that a monetary union can make no sense, as Scotland wouldn’t be big enough to support the UK if it got in trouble. In reality any monetary union proposal would be framed around the UK being in chief control, and helping out the Scottish government from time to time in exchange for the Scots not rocking the boat in other ways (for example in terms of taxation). There is a way that such a thing could be set up to be mutually beneficial, but the UK government have clearly decided to scotch this idea in the hope of influencing the outcome of the referendum.

    All that would kind of undermine the whole point of independence anyway. Which leads me to the point of .. exactly what is all this is about ? If the Scots want to keep the head of state, the currency and various other things exactly what are they suing for independence for ? The danger for the Scottish Nationalists surely must be that their proposals look like mere tinkering rather than a whole new beginning.

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  44. FuturePhysicist (profile) says:

    The fact that Scotland could not insure the rest of the UK is a logistical reality whether the border is there or not, Scotland cannot choose not to insure the rest of the Union within the Union anyway.

    Does anyone ever say London could not insure the rest of the UK, theoretically it can, but because it has the capital purchasing power and therefore can insure the rest it has all the more power to be able to decide not to and in principle have Scotland, Wales and the rest of England insure it.

    When it comes down to it, why does the rest of the UK need to insure Scotland or indeed Northern Ireland for that matter?

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  45. Charles_Gould (profile) says:

    Comrade Stalin

    The pre 1970s period was before international capital markets were deregulated, so a very different situation to today.

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  46. Mainland Ulsterman (profile) says:

    Content aside, I can only think George Osborne making a speech in Scotland telling Scots what to do isn’t going to help the Better Together campaign overall.

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  47. Mainland Ulsterman (profile) says:

    The more substantive point though is that Wolf is broadly right in suggesting that currency union is not a question just for Scotland. It would be a voluntary arrangement between the putative newly independent Scotland and the rump UK, which would require the consent of both parties. So the Better Together point is a fair one: the currency union question is not wholly within Scotland’s power to decide, any more than any other international agreement they should enter into qua independent nation.

    But it’s still a mistake for Osborne to be the messenger. Surely Alastair Darling should have led that, with just a quiet nod of confirmation from the Governor, Chancellor and Shadow Chancellor? Seems the first real tactical howler I’ve seen.

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  48. WindsorRocker (profile) says:

    Mainland Ulsterman,

    I see your point about the messenger vs the message but it should also be remembered that the Permanent Secretary to the Treasury initially penned the advice that gave Osborne, Balls and Alexander the basis to make their statements.

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  49. Mc Slaggart (profile) says:

    “exactly what is all this is about”

    Getting the vote up to around 40 %

    “Firstly, as Alex Massie has said before, even if Salmond wins 40 per cent of the vote, that is a moral victory and will lead to demands for a new referendum at some point soon. Two-thirds is usually the minimum requirement for constitutional changes in countries with written constitutions, because it suggests a consensus; any society in which more than a third of the population supports a change in the status quo is a divided one.

    People generally don’t like living in divided societies, which is why they will tend to move towards one mainstream view; what normally happens is that once a rising idea has reached a tipping point it then becomes accepted as orthodoxy. Although some ideas do grow and then recede, Scottish independence, which has risen from a single-figures idea to one closing in on half the population, may well reach that tipping point.

    It will also benefit by cascades; people think that it will eventually happen, so they get behind it in expectation. In England there is a feeling that since the split is inevitable, it’s best to end uncertainty and acrimony by getting it over and done with.”
    http://blogs.spectator.co.uk/edwest/2014/02/britain-is-doomed-even-if-salmond-loses-septembers-independence-referendum/

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  50. Barnshee (profile) says:

    Dear Alex

    How do you propose to fund “Scotland”?

    Do you intend to set up your own “revenue and customs service”? Please note the existing system is available (short term) for rental

    Can you indicate levels of tax intended for VAT, Income tax Excise Duty Corporation tax etc.?

    Please be advised- on Independence rump UK will

    1 Cease tax collection in Scotland
    2 Cease funding all public expenditure in Scotland

    We assume you have made the appropriate contingency arrangements for funding during any transition period.

    The position of “Scottish” citizens arriving in Rump UK seeking public services will be a matter for further negotiation

    Yours faithfully

    Rump YK

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