The constant refrain from opponents of independence is – How can Scotland become independent when you don’t even know what money you’re going to use? Eh? Eh? There is an underlying current of belief among such people that Scotland, uniquely among the nations of the world, would be incapable of having any sort of currency at all. And if Scotland does manage to find a currency, then it doesn’t matter what that currency is, it’s going to be a disaster.
Of course this unremitting negativity isn’t a reflection on Scotland’s currency options, it’s really a reflection of the mindset of diehard opponents of independence. If they are telling you that a resource rich, highly developed, economically advanced northern European country can’t have any currency at all that works for it, what they’re really saying is that they have an emotional objection to Scottish independence and they’re desperately trying to scare people away from the idea.
It is a fundamentally dishonest position to take, yet this was precisely the stance adopted by Alistair Darling (remember him?) the leader of the Better Together campaign in 2014. Despite repeated questioning during a debate, Alistair was unable or unwilling to answer a question about what form of currency was possible for an independent Scotland. If a person is setting themselves up as an expert on currency issues, it’s very revealing that they’re unable to say what form of currency is a good solution for a country like Scotland. Not so long ago there were South Sea islands with a neolithic culture which successfully used large stones with holes in them or exotic feathers as currency, but according to opponents of independence, Scotland is incapable of achieving something that can be managed by societies that hadn’t even invented the wheel.
The first thing that needs to be pointed out here is that there is no country in the world where independence has been predicated on the question of what currency it’s going to use. That was the very last thing on the minds of the Irish when they became independent from the UK in 1922. It didn’t trouble the Maltese when they became independent from the UK in 1964. It wasn’t a concern when Slovakia and the Czech Republic dissolved the former Czechoslovakia. All these nations quickly found a solution that worked for them. Scotland will do the same.
The only reason that the currency is an issue in the Scottish independence debate is because during the first independence referendum campaign, the then Scottish Government stated that its preference was to enter into a currency union with the rest of the UK following independence. In effect, what the independence campaign of 2014 was saying was, “We want to be independent Westminster, but we want you to cooperate with us on the currency question for the mutual benefit of both of us.” This was in effect asking for Westminster’s help for Scotland to become independent, and it has since been recognised as a major tactical error on the part of the independence movement.
Naturally opponents of independence said “No”, and they said no with considerable glee. Westminster politicians queued up to say that they’d refuse to sign up to a formal currency union with an independent Scotland, and they have continued to press the issue ever since because it allowed them to make the spurious argument that given Westminster’s refusal to agree to a currency union, independence supporters didn’t even know what currency they were going to use.
The important thing to take from this episode is that the arguments about currency are not primarily economic, they are political. We are no longer in 2014, and the Scottish Government and the independence movement are no longer asking for the cooperation of Westminster on the currency issue, or indeed anything else.
So back in the real world, there are essentially three options for a currency in an independent Scotland. These are continuing to use the pound, using a new Scottish currency, or adopting the euro. Any one of them would work for Scotland, the choice between them is really a political question. However the key thing to note here is that in an independent Scotland, it would be for a government elected by and answerable to the people of Scotland to choose, and that government would choose the one that works best for Scotland at the time.
According to current opinion polls, continuing to use the pound sterling remains the favoured option amongst people in Scotland. This is also the position of the Scottish Government, although the SNP has committed to moving to a new Scottish currency when the time is right. Despite what certain opponents of independence may tell you, there is absolutely no reason why Scotland cannot unilaterally continue to use sterling after independence, and to do so without a formal currency union with the rest of the UK. Scotland does not require the UK’s permission to continue to use the pound. Sterling is a freely tradeable currency. Westminster can’t stop Scotland from using it.
This is what Ireland did when it became independent. The Irish Free State of the 1920s continued to use the pound sterling for several years after Irish independence, until introducing an Irish currency, the punt, in 1928. When the punt was introduced and for many decades afterwards, it was kept at parity with sterling. Punts and pounds sterling continued to circulate freely throughout the entire island of Ireland. Like the UK at the time, Ireland continued to use pounds, shillings and pence. Irish coins were the same size and weight as their sterling equivalents. Ireland even switched to a decimal currency on the same day as the UK and the new decimalised Irish coinage remained the same dimensions and weight as the UK equivalent.
The advantage of continuing to use sterling unilaterally is that it makes for a smooth transition to independence. It would also help to protect the economy of the rest of the UK after it loses the revenue from Scottish oil and gas. Since the rest of the UK is a key trading partner of Scotland, it’s in our interests to ensure economic stability in the rest of the UK – all the more so since following Brexit the British economy is set to take a serious hit. This will help to protect jobs in Scotland. The disadvantage is that it leaves the Scottish economy too closely aligned to that of the rest of the UK and restricts the freedom of an independent Scottish government to make its own financial and economic decisions.
However it’s important to remember that an independent Scotland which continues to use sterling unilaterally is still an independent country. Montenegro uses the euro unilaterally, but no one can seriously claim that it’s not really an independent country as a result. Some opponents of independence claim that an independent Scotland unilaterally using sterling would have less independence than Scotland does as part of the UK. This is, frankly, just stupid. As part of the UK Scotland doesn’t currently have any say in determining the UK’s monetary policy or the interest rates of the Bank of England. Meanwhile it is subject to Westminster’s decisions on things like corporation tax, or austerity, or VAT rates.
The second option is to introduce a Scottish currency, which would probably continue to be called the pound. The new Scottish pound, like the punt, would most likely be kept at a 1:1 exchange rate with sterling, at least for several years. Other than seeing some new designs of coins, which would be the same size and weight as existing coinage, it’s unlikely that the average punter in Scotland would really notice much difference. After all, we already have distinctively Scottish banknotes. Moving to a Scottish currency on a par with sterling would merely formalise this arrangement.
The current Scottish Government has proposed that it will continue to use sterling unilaterally, and will only move to a Scottish currency when six tests are met. Essentially these tests boil down to proving that there is an appetite amongst the public for a new currency, ensuring that there’s a stable central bank and currency reserves to back it, and making certain that the new currency will suit the needs of the Scottish economy better than sterling. Others within the independence movement seek a quicker move to a new currency. However the key take-away here is that the introduction of a new currency will only take place when the people of Scotland desire it, and when it’s in the interests of the Scottish economy to do so.
There are steps to take to set up a new currency, and these steps can be complex, but the other important point is that introducing a new currency is not, as opponents of independence would have you believe, on a par with finding a solution to the problem of faster than light travel. Introducing a new currency is not some huge leap into the unknown, it does not require radically new and hitherto unknown breakthroughs in science or technology or economics. This is currency, not science fiction. It’s not beyond the capabilities of a modern European nation with a developed economy like Scotland.
Setting up a new currency has been done before many times, and even in countries which have far smaller and weaker economies than Scotland the process has gone quickly and smoothly. After the dissolution of Czechoslovakia, the new Slovakia took just one month to set up its new currency, the Slovak koruna. After the dissolution of the Soviet Union, Estonia took only ten months to set up the kroon. The advantage of a new currency is that it permits the Scottish government of the day freedom of movement on monetary policy and interest rates. Yet it does need to be noted that at present a majority of people in Scotland would prefer to continue with sterling. This may well change after independence.
The third option is to use the euro. There are probably more myths, misconceptions, and outright lies about this option than about any of the others. It’s very much in the interests of opponents of independence to sow confusion on this topic, as at the moment there is no majority in Scotland for adopting the euro, not even among most people who are already convinced supporters of Scottish independence.
The first to note is that following Scottish independence, Scotland cannot be forced to use the euro. Neither can Scotland transition immediately from using sterling to using the euro. Before Scotland can adopt the euro, it must first have established its own currency and all the requirements that go along with that. That new currency must have been in use for a period of at least several years to ensure that it is properly bedded in, and then once that has been achieved Scotland must sign up to the European Exchange Rate Mechanism II (ERM II), for a period of at least two years. Then, and only then, could Scotland adopt the euro. So even if Scotland had a clear desire to adopt the euro, which isn’t currently the case, it would not be able to introduce the euro as its currency for several years after independence, and probably more than a decade.
Although joining the EU does mean that a new member must “sign up” to the euro, there is no set timetable for doing so, and there are no penalties for not doing so. It would be entirely for the Scottish people and government of the day to decide when or if Scotland was going to adopt its own currency, and then it would be up to the government of the day to decide when or if Scotland was going to join the ERM II. These are entirely voluntary steps, and the EU does not set a schedule for a member state to do so and neither does it impose sanctions of any sort on a member which doesn’t comply.
Sweden and the Czech Republic have both effectively stalled on the euro indefinitely, even though they are theoretically obliged to adopt it. The UK is very proud of its opt out, but in reality a formal opt out is not required, there is an effective opt out in the fact that the decision about when to join the ERM II is entirely up to the member state and there are no punishments or negative consequences from the EU for not doing so. Neither Sweden nor the Czech Republic have joined the ERM II, and neither have set any date for doing so.
Joining the euro may be a good option for Scotland at some point in the future, but it’s not going to happen any time soon. And when it does happen it will only be because a government with a mandate from the people of Scotland to do so is convinced that it’s in the best interests of Scotland. Scotland within the UK is so used to being powerless and a victim of UK economic decisions which do not benefit this country that opponents of independence are determined to persuade people that following independence Scotland will still be powerless. That is categorically untrue. If Scotland ever does adopt the euro as its currency, it will only happen with the consent of the people of Scotland.
The most likely scenario is that upon independence, Scotland will continue to use sterling unilaterally for at least several years. When a new Scottish currency is finally adopted, it only be when there is a public appetite for it, and that new currency will most likely be kept at a 1:1 exchange rate with sterling. The new Scottish pound and sterling will continue to circulate freely in Scotland. Ordinary people are unlikely to notice much of a difference.
The important thing however, is that in an independent Scotland, the country’s financial and economic decisions will be made by a Scottish government which is answerable to the people of Scotland, and which makes those decisions in the interests of Scotland. What will not happen is what we have as present, a British government which makes financial and economic decisions in the interests of London and the South East of England. After independence, whatever currency we’re using Scotland will control its own money and make economic decisions in its own interests. That’s what controlling your finances is really about, not which currency it’s denominated in.
The plan for this article and several others dealing with key points in the independence debate is to collate them and publish them in book form when we have a date for the independence vote. Some of these articles have already been published on this blog and others have yet to be written. The idea is that when we know when Scotland will be voting, I will do a crowd-funder specifically for the purpose of raising money to get the book printed, and then it can be distributed to Yes groups and campaigners and given away for free.
There’s already a Wee Blue Book, let’s have a Wee Ginger Book too. This isn’t meant as competition for the Wee Blue Book – which is a fantastic initiative with proven success – but rather it is to be complementary to it. Different writing styles and different books can appeal to different readerships and different demographics. The more information we can get out there, the more people we can persuade to Yes. If you have any suggestions for topics for articles to include in this book, let me know and I will write something up – if I haven’t done so already.
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Wee Ginger Dug 
No argument with anything in this excellent article. It serves to calm the nerves of the doubters. Personally I suspect that splitting the Scottish Pound off and letting it float away from the GBP will need to happen sooner rather than later.
The economy of England and Wales may well tank when their much vaunted global trading deals become harder to achieve than the clowns of the Tory party suggest. This will bring the GBP down in relation to the Euro and the Dollar. Sure exports in a currency tied to the GBP will be more competitive but at the same time imports will become more expensive, perhaps considerably so. We can feed ourselves with domestic produce, but there is only so much porridge, neeps, tatties and mince which I can eat. I will start to yearn for a reasonably priced bottle of Rioja to wash it down.
What I am saying is that an adverse exchange rate which considerably undervalues the Scottish pound cannot go on for very long.
Perhaps someone who understands economics better than I can refute my fears.
It has by default to be the pound at changeover, but the smackaroonie is so psychologically FU on so many levels to be irresistible thereafter…
As to a reasonable Rioja, do bear in mind you would no longer subject to UK taxation constraints nor market intermediaries post Indy, though doubtless a rumor will follow insisting the Spanish Government will restrict sales to Scottish Conservatives 😉 All 5…
The smackaroonie would be a good name for a new currency.
@Morton Cellar
Scotland had a currency before the union – the original £. It still has the £.
I would have thought that every tool that told the story that Scotland being indy is a reversion to normal would be wanted right now (Indy is the safe choice). If you start trying to pretend its a new currency you undermine the powerful story that Scotland has sovereignty that pre-dates the Union…hence, there is nothing scary in Dissolving the Union as Scotland already has institutions of STATE.
P.S. YES needs to get its story straight. Either you are an ancient country (with history and official instruments) or you are a new country with nothing. To those who fear change, one of those options can be sold as the safe choice, the other is scary.
The desire to overlay future desires into a campaign about threats to Sovereignty looks like a hangover of 2014. This time the threats from English isolationism are serious and existential – time to start focusing on 2019 issues and not 2014.
As I understand it every ‘Scottish’ £ wether it be Bank of Scotland, Royal Bank of Scotland or the Clydesdale Bank is backed by a Bank of England £ on deposit in the (English) Treasury. On independence those deposits would surely revert to a Scottish Central Bank when set up and we could gaily carry on using the same notes as before. Divergence from a S£=E£ would happen as you say when it suits Scotland.
Now I await the shooting down!
Indeed no shots fired 🙂
Scottish Banks issuing notes already are distinct from Bank of England notes, so retaining the pound in name makes eminent sense as is provides continuity until such time a Scottish Central Bank establishes and controls the issuing banks and sorts out coinage, then the Scottish pound can diverge on exchange rates.
As was highlighted earlier the Scottish pound pre-existed the Union so would be reversion to original, and on this occasion at least, the Scottish pound would start at parity, as distinct to the devaluation enforced by London at Union.
Bank of England notes being in future refused as legal tender in Scotland has a tinge of ironic revenge to it… 😉
What is abundantly clear is that whatever is promoted on any issue over Independence will be shot at by the anti-independence brigade to demoralise or frighten the electorate, crops will fail, meteorites will fall unhindered, pestilence and poverty will ravage, Queenie will be very very upset, etc., etc… We can only respond “…and? That’s our business, our risk, our choice”.
2 points: Firstly, there is no (English) Treasury. The “Bank of England” was nationalised in 1945, and so is the Bank of the U.K., and as such at least 8% of assets belong to Scotland – at the time of nationalisation it would have been 10%.
Secondly, Scottish Bank notes promise to pay Pounds Sterling while Bank of England notes only promise Pounds: Pounds of Peanuts?
There is another option for an independent Scotland that issues its own currency. It can create its own Central Bank and financial system based on the principles of Modern Monetary Theory (MMT) – and stick two fingers up at the global financiers and private banking cartel. We have to do this at some point in humanity’s journey – it is the financial constraints and demands that have taken us to the brink and influence every decision we make, even to the detriment of the planet. If we are to change the way we live and attempt a clean up of all the pollution, we cannot rely on the bankers’ generosity and philanthropy – surely that is obvious by now. We MUST change the system and take back control if there is to be any hope of a future for humanity.
It just needs a catalyst, courage and conviction. Personally I had hoped that the UK as a whole would have embarked on this brave journey. It is the UK banking system in the City and offshore that facilitates the spider’s web controlled by a few secretive family dynasties. For their exclusive benefit. The chaos of Brexit provides an opportunity for a complete revamp of the political and financial framework – anything is possible – but only if there was convergence of the required circumstances.
Adam Smith understood the power and dangers of money – how it could be used for the benefit of all – or misused to the detriment of everyone. How appropriate it would be if it were Scotland that lead the way to a new enlightenment?
Good post, Paul.
@Mark Russell
Don’t muddy the waters!!!!!!!!!!
The only issue at stake now is who gets to make the decision, not what that decision is. Any overlaying of future goals will only give “Unionist” a crack to use against you and divert the argument.
What argument? If it’s of any importance, a second referendum may well deliver a majority for independence – but it also has the potential to divide society in Scotland much like Brexit has in England. Particularly if the margin was narrow. What then? A decade of further polarising political debate & stalemate whilst Scotland attempts transition to a European state – all against a reliance on the Bank of England’s control of Sterling. Whatever that may be worth.
The ‘safe’ option would be to join the Euro, but that currency is just as vulnerable as Sterling – as are many others – as the Central Banks seek new, emerging markets to exploit. The FT reported a few weeks ago of a significant capital divergence away from the UK. It is hardly surprising. By the time Brexit plays out later this year, it is only a matter of time before the Treasury defaults with all the attendant consequences for the UK.
Sure we can hold another referendum, but that won’t be a priority for Westminster or the rest of the UK. It may not even be a priority in Scotland. History is littered with examples of rapid collapse in society – it just needs a different kind of catalyst.
All of this is nothing but a deeply unfortunate diversion. I don’t dispute that climate change is a pressing danger, but whilst it may be an old-fashioned term, pollution is the imminent threat. Even if Scotland achieves independence, what kind of world will it belong to if we continue to destroy the only two things of importance for every one of us? Our atmosphere and our oceans. Air and water. Have you any idea of the magnitude of catastrophe that is already unfolding? The health and morbidity impact?
A decade ago there were 11,318 recorded cases of sepsis in the NHS with 3,908 deaths. Last year there were 261,000 cases with 49,300 deaths. Diabetes, dementia and mental health cases continue to rise at an exponential rate. The Pacific ocean is fucked with Fukushima still irradiating the groundwater that flows unrestricted into the sea – with tragic consequences for all marine life. Recovery of the fuel rods from adjacent pools will take another decade – but there are still no proposals for recovering and isolating the core meltdown material from three reactors – now thought to be burning its way through the bedrock.
If you watched Chernobyl, you will remember the brave miners tunnelling under the reactor building in an attempt to install a cooling system to prevent the core from burning through the concrete base and polluting the groundwater. Had this happened, most of eastern and central Europe would now be uninhabitable. This is what is presently occurring in Japan x3 and has been for several years. If we don’t somehow recover the core material, toxic levels of radioactive isotopes will eventually, within a few decades, endanger all marine life on the planet. As if plastic and chemicals weren’t enough to content with.
Our rivers and waterways – including the reservoirs and drinking water, all contain high levels of antibiotics used in agrochemical products for livestock – and resistance has become a critical issue in medicine. Unless there is a sudden and unified global effort – and to do that, you have to be able to fund the enormous change required in all societies – Brexit, Independence and everything else that consumes us currently, may fast become matters of complete insignificance.
Apologies for muddying the waters again, Tol. It’s probably best to keep worrying about the pesky Unionists. At least you’ll be able to sleep soundly.
Best,
@Mark Russell
Wow, so that simple and clear discussion on currency has now expanded to become a point that includes:
– A decade long political/social uncertainty
– Social collapse
– The Euro
– The NHS
– Sepsis
– Chenobyl
I suspect for many on the fence or not fully engaged,that would make them shut off and say its all too hard.
Personally, I think it is dangerous to put it in terms of:
“…A decade of further polarising political debate & stalemate…”
or to compare it to Brexit. Instead of just noting that Scotland will just like every country have a normal process of a country deciding its normal operations. That is nothing to be scared of. In fact is the very thing YES is calling for – and should be celebrated. (I had understood one of the points of the always too polite SNP strategy is that it demonstrates that it can hold inclusive, respectful discussions)
Brexit…WTAF!. Brexit is only an example of how poorly Westminster held a referendum (potentially deliberately so) and the political process after that. The bitterness, the winner take all, the plebiscite as a binding referendum with no legal or super majority protections were all baked in to the process. This failure to understand or manage voting is a sign the core UK political process is broken and undemocratic. In reality one of the issues in Brexit is the UK’s democratic imbalance allowed England to speak for Scotland and Northern Ireland. Seriously, If England (and Wales) wanted to go its own way by itself, nearly all the issues go away.
But I could be wrong.
Yes, I appreciate that complex arguments can prove daunting in an age where even two short paragraphs are sufficient to deter all but the most determined. I hear the arguments you make regarding UK and Scottish politics and I don’t disagree, but the point I was trying to make is that there is a much greater and immediate risk facing all of us – with Brexit and its consequences for the UK, including Scottish independence offering no solutions and only further delay. What a bitter legacy for our children. All the fantastic opportunities for an independent nation to foster harmony and social cohesion in a beautiful country, will be lost because of our collective cognitive dissonance and inability to see what is actually happening around us.
Perhaps ignorance is bliss after all.
@Mark Russell
I don’t disagree with you. My only real point is that when making your case (to win) your points have to cut – and cut sharp like a razor. (I refer to it as weaponising truth).
If you start on a long, un-focused story, you look like you are hiding something. All any spoiler has to do is start arguing any of your associated points…and your sunk down a rabbit hole trying to defend or solve the unsolvable. Sound familiar?
I love the way you think big. The issue is to take all that knowledge and hone it to sharp un-rebuttable points (that don’t open up new arguments).
The Brexit debate is the warning – the muddled truth (or half truth) will lose to the believable lie.
I already have a folder containing useful articles to shout down the naysayers when the time comes. I’ll have a think about subjects I may need back up on because no-one makes an argument quite like you Paul 🏴
That’s superb The Wee Ginger Book, in addition to WBB2. I’m in with a contribution.
Topics for same – the threat to our Scottish NHS (and rUK’s) from Brexit.
The real strength of our economy (particularly re energy (old and new) and exports).
Scotland’s potential film industry – NI got the Game of Thrones business and it was worth 25 million a year to them, not just in ‘filming’ jobs, but in the associated tourism spin off…. and their first choice was Scotland, but we never had the studio to cater to them.
And speaking of which it isn’t just jobs for actors, its joiners and sparkies, and makeup artists, hairdressers, and caterers and BnB’s, and school kids and students getting work as extras, seeing all those opportunities and being inspired to reach for that.
One last suggestion/food for thought – will a no voter, under pressure, read a whole book, or would a series of A4 or A5 leaflets, on one subject each, reach the audience better? Particularly if they are produced and circulated now? They could be collated later into a book.
That fella McAlpine made a very good point after 2014 – we cannot afford to try and cover all the ground during a Referendum period – we need to educate/debunk long before (particularly in the face of the media bias).
Anyway – big thank you again for all you do.
Also with regard to films and tv series, special effects studios would be welcome. My son works in London where all the big names are that do vfx for Netflix etc. He’d much rather be in Scotland though.
With no disrespect to the original blue book, a Ginger version sounds absobloomininluttelyfine….
I think there would be merits in iScot running an “IT’s TIME” issue. Where YES writers debate and refine the core arguments.
Scotland needs its diversified base of thinkers, but it also needs a place where the YES movement can speak with those desperate campaigners together.
Whilst I understand the thinking, people including WGD need to understand that it has already been decided at SNP conference that a new Scottish currency will be introduced as soon as possible.
People should look up MMT Scotland to get some excellent economic information.
This is a talk by Dr Tim Rideout on establushibg the currency. It’s worth while watching. Tim is currently touring Scotland to give talks on the subject.
https://l.facebook.com/l.php?u=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DY9AnWlMdh68&h=AT3CeOeA_SqcmTsqs2zZTANJiARUf-lhyZSMkSYx3xYa_DfyeYeFVi4WhEmzHOeN-ByqftUGjf2TYt9XicRc9Bm-RCjCKwOdd0xs0v5-lzjwzhB0xBt__nqZsewhoG5bGQVFGr73sbmyD0og2qvXGQ&s=1
K Clark. The wording of the amendment voted on at conference was, “As soon as is Practicable”. My understanding is that the six tests being met before a new Scottish Currency is introduced, remains.
Aye, we’ll be having a stock of WGBs at Strathaven Yes Hub, for sure; and WBBs and the much-vaunted BfS tome when it appears.
I hope you’re wrong about the Scottish Gov taking a few years before introducing a new Scottish currency as we’ll need it as soon as we are independent. We could still use the GBP but our own currency needs to be available too, on a like for like basis, to begin with. SNP took advice from Andrew Wilson, a lobbyist, who helped author the Growth Commission Report and took advice from bankers (who caused the financial disaster!). I agree that we need to look out for our neighbours south of the border who are on a self-destruct course on brexit but at the end of the day, we have to look after ourselves.
I believe an amendment was passed at the SNP’s Spring conference that would mean a new currency being introduced sooner rather than later. I am surprised that it was not mentioned in the article when discussing the current policy. Passing this amendment which came from the membership means that members are now invested in the policy and have ownership of it in a way that they never were in the currency policy proposed in the 1st indyref.
K Clark. The wording of the amendment voted on at conference was, “As soon as is Practicable”. My understanding is that the six tests being met before a new Scottish Currency is introduced, remains.
The process of transition from GBP to Scot£ is clearly set out in Robin McAlpine’s book “How to Start a New Country”. It’s well worth reading: it’s easily understood and progresses logically through each topic, so in effect it forms an outline project plan for the whole transition to independent statehood.
As to currency post-independence, continuing with GBP beyond the transition period makes no sense. We’d be restricted by the fiscal choices of Westminster, so our economy would be affected by their political decisions and, since the two economies will inevitably diverge, it could damage Scotland’s economy significantly. The same argument applies to adoption of the Euro, so the only sensible option is to have our own Scot£ (pegged to the GBP for the duration of the transition period and thereafter free-floating) and apply MMT to the management of our economy, as there’s no point socially or economically in applying the neoliberal economic practices that brought us the Great Financial Crash of 2008.
Totally agree but it’s taking a long time to get everyone on the same page (sigh)
Having been a ”wee ginger ” all my life I would warmly welcome a WG Book to shoot down the naysayers come the referendum !
Revenge of the Gingers …I like it !
Excellent article on the Scottish currency issue and good follow up comments There is no single obvious ‘right’ answer but nor is there any insurmountable problem. Just needs the facts aired and discussed until a preferred solution emerges.
I like the idea of a wee ginger book so please develop this concept till it is more clearly defined. I would be willing to contribute once it’s clearer what is expected.
We need you at this time more than ever to keep inde in mind when the SNP seems to have forgotten it should be concentrating on independence and even Wings has recently lapsed into sex and gender digressions in a sort of literary equivalent of the circular firing squad.
Well….. My suggestion would be
A really upbeat look at how we will be writing a Constitution.
Thanks to the American misty eyed portrayal of how their Constitution is the best thing since sliced bread. Most Scots are aware on some level that a Written Constitution is a desirable thing to have.
Some of us even regularly quote parts of it
To paint the picture that we can not only have one too,but also have input into writing it right here right now…. Would I think he quite an aspirational thing to be able to talk about as a part of the Campaign!
The British Nationalists have no comparable offer,and can’t really rubbish the concept, as thanks to the U.S. the notion of the benefits of one is deeply planted.
Secondly……
A light hearted ( if there’s room ) look at contenders for our New National Anthem?
From the perspective that we have a choice about it.
Just something to get people talking in a way that’s not ” heavily ” political,but with the underlying element that we are speaking about an independent nation.
Everyone can discuss the pros and cons of songs and their meaning!
Maybe even suggesting that groups could have it be a “last topic” in the campaign meetings in a game show kind of way and, that ensures the meetings end on a positive ( pardon the pun ) note.
People walking away thinking what they would choose are also thinking of Independence ….. And that should help them take the next logical step to thinking of the other stuff that was discussed to help them get that choice. To try to create the so called “water cooler ” moments is easier to do with a well kent song than with fractional reserve banking?
There is no reason why a new Scottish currency – and hopefully one proudly differentiated in name and attributes from the old colonial one – couldn’t be introduced as soon as the necessary institutions (Central Bank, etc.) are in place, and have it operate in parallel with the English pound. The funds of those who choose to transfer to the new currency would provide the initial reserves. Let the early adopters lead the way! When sufficient support has thus been established by ordinary people literally putting their money where their opinion was, the currency could then reasonably be established as official legal tender, and have to be accepted by everyone in payment.
Which is just as it should be. But the English pound could continue to be held in bank accounts by those preferring to do so, and continue to be an optional tradeable currency for those mutually agreeable to use it.
In fact, there is no reason why the euro should not be made useable in exactly the same way. Shops eg. willing to do business in either of these optional “foreign” currencies might well prosper from the convenience to visitors or to customers with income in those currencies.
By being flexible we can potentially benefit enormously. A win-win.
I was just thinking that you should compile a wee book using this and other articles. So I was pleased to read that this is planned. I look forward very much to the Wee Ginger Book, for it will contain all the most level headed arguments for independence as well as your crisp destructions of the alleged counter arguments. The above contains all a person needs to know about the so called currency issue.
For what it’s worth I believe the currency issue to the reddest of the herrings in the sea of nonsense that is drowning Britnattery. In the future it is likely that cash transactions will become fewer and further between, so at a practical level there is no reason why any major currency should be refused – although refusing Bank of England banknotes is always good for a laugh. Obviously at the level of state finance, there has to be a stable way of measuring capital that is tied to international markets, but given the wealth of actual resources in Scotland, not to mention its overall trade surplus, I do not see any problem with that.
Agreed that the issue of currency has been blown out of proportion in “the sea of nonsense”, but is a matter to be resolved, so still worth discussion.
It is the vindictiveness and downright lies of the propaganda Paul is underlining in these recent pieces, it is not intended for education of those committed to abandon this sham-show but as ready reference to pass on to those rattled and confused by the propaganda or soon will be.
2014’s lessons were of monopoly over mass media access. These uncontrolled channels and one newspaper are the only rebuttal source for what will be a slick, heavily funded, blistering propaganda campaign to deny Scots freedom from the London mafia.
Of it should be discussed. And this article forms an extremely good basis for that discussion.
Front page of today’s FT looks very interesting. Can’t blow it up to a bigger size. Can someone else help? Thanks.
During the run up to the 2014 referendum I noticed a wee shop under the Central Station Bridge which had a notice in its windows saying “We accept Euros”. If a wee shop can decide what currency it will accept surely we have no difficulty with a currency for Scotland. Truth is, currency is what the country decides it is. Bits of paper and lumps of metal are not valuable in themselves; it is what backs them up. In Scotland’s case, we have plenty to back up the paper.
Can I also put in a word for a responsible banking system as personified by the late, lamented Airdrie Savings Bank. A great bank, serving the community, driven out of business by the reckless criminals who caused the Banking Crisis of 2008 and by the equally criminally responsible politicians who aided and abetted them.
We should use Estonian Kroons. Then I can get a half a Kroon like I used to get, when I was a bairn.
“Neither can Scotland transition immediately from using sterling to using the euro”
Actually it can because the euro is also a fully tradeable currency and you even mention Montenegro using it unilaterally. Using the euro isn’t the same as being a member of the eurozone.
Scotland can’t be forced into the eurozone and as you say doesn’t met the entry criteria but 6 countries who aren’t even members of the EU use the euro. Admittedly they are small countries – one is Vatican City – but still.
Point being we have options. Own currency (my preference), sterlingisation or euroisation (I think I made that last word up but you know what I mean).
We’ll have a currency end of.
Reblogged this on Ramblings of a 50+ Female.
Hi Paul and thank you for your blog, Some thoughts on a Scottish/English border. I agree that a seamless invisible border is good for trade, that is as long as both countries comply with EU regulations [ post Scottish EU membership] but if there are trade agreements with England, and I am thinking about America then a seamless border may be inappropriate. Also EU migrants can come to Scotland and move across the border to England, although I do not why they would want to, so the English authorities would want a border check to control the EU hordes they fear. What do you think, Regards, Ken
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They could do the same by going through Ireland. Ireland isn’t a part of the Schengen Area. You need to show a passport to get into Ireland from another EU country.
The point about money is only that we agree that the quantitative tokens we hold in our hands and the numbers we see in our bank accounts represents the value of stuff and can be exchanged with its value intact. That is all. It is an agreement. We could use shells if we wanted. Or bits of paper with numbers on them. It doesn’t matter. As long as we agree.
Glad to see a few comments above which recognise that an independent currency IS first and foremost about economics. I’m thinking particularly of the excellent comment by Alison, and the follow-up comments by Legerwood and Kenmath.
WGD makes some sensible points about the many choices open to an independent Scotland, including the fact that we would not be forced to join the Euro. However, the real point is that we MUST NOT join the Euro, or remain shackled to the UK’s currency.
The ability to set our own rates of tax, and crucially to implement a better tax code, is important.
However, the ability to control our economic affairs, including public spending, borrowing and interest rates, is even more important and that can only be done with an independent currency.
Modern Monetary Theory (MMT) shows this most clearly to be the case. However, even if you have not absorbed the facts that MMT brings to the table, it’s quite clear that Scotland’s economy would remain tied to that of the rUK if we kept the GB£ – why would you vote for that?
As far as the SNP are concerned, the decision has already been taken at conference in May that Scotland will adopt its own currency as soon as possible after independence.
indyref2soon mentions a very important point that is often overlooked: an independent Scotland has a one-off opportunity to devise an entirely new principles-based tax system. The UK tax code results from 2 centuries of successive Chancellors of the Exchequer making changes, often for short-term political ends, but very frequently these produce inconsistencies, inequalities and endless unforeseeen consequences. The result is a vastly over-complex UK tax system which is in a constant state of change and correction and which no one understands in its entirety.
We’d have the chance to start from scratch and create a much simpler system which hangs together logically and consistently because it’s principles-driven. This has advantages for the taxpayer (it’s easier to understand and to complete tax returns) and the Scottish Revenue Service (easier to manage and almost certainly less resource-demanding).
I was planning to write about taxation and tax policy in a different article. I’m trying to keep all this as simple as possible and am trying to pitch it at undecided voters.
Andrew Wilson was pitching his Growth Commission Report at undecided voters, and it has been slated from all sides.
On currency, the simple option is to say we would move to an independent currency as soon as is practicable, without any complicated tests that are designed to delay or even prevent this happening.