I had an article in Prospect magazine yesterday on the subject of Scotland's currency after independence. The conclusion to this was:
I hope it can, and will because this is an issue much too important to Scotland's future to be left to chance.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
With the Brexit referendum we didn’t know what the terms would be -out of the single market or in like Norway- until we left. If it abides by the Venice convention, the consequences of the decision each way, should be clear.
The margin was so small , 3.8%, that it was soon reversed. I put it to Craig Murray that perhaps there should be a clear margin as with many referenda around the world, maybe 60-40 or even 55-45. He thought it a daft idea.
It is a difficult political decision. There is a misunderstanding in the general populace about what a central bank does or more specifically what the BoE does. This extends to a misunderstanding of what money is, what government debt is, etc. (discussed regularly in your column). I have tended to side with the SNP view recognising the optics of the situation – because the generally held public view is wrong and unlikely to change when fear politics kicks in.
However, with the BoE about to impose a wholly wrong-headed further increase in interest rates and a host of other questionable decisions, it is clear the BoE is not actually competent to fulfil its apparent role – much of this is down to Bailey himself – assuming that it’s role is to positively contribute to the economic management of the UK. The recent decisions suggest that this is not actually their intention…they seem to be maintaining and are intent on maintaining the vast wealth gap and serving a cadre of powerful self-interests.
I am now tending to the view that Scotland should establish its own currency and its own central bank but under government instruction. It’s aim would be to contribute to the achievement of what the Scottish government has set out in its 10-year National Strategy for Economic Transformation – in short a well-being economy and based on a distributive, regenerative economic model.
If you find the time, I’d really appreciate your views on this.
There is no doubt in my mind – or any of my family – that we will be voting for independence given the chance.
I am going to muse on a Scottish Bradbury pound
Look it up
I strongly support the view that the SNP leadership urgently needs to address the issue of having our own Central Bank and domestic currency as soon as possible after the independence vote.
I am not impressed with your view that their failure to do that would compel me to vote against independence, I would die before I did that Richard.
Andy Anderson
My argument is that ruining Scotland is a price too high for the SNP to impose on an independent Scotland
They can avoid that
Will politicians change policy in the light of rather obvious common sense? Surely not! Words fail me.
A question to the SNP then?
Do want to be THE dog or the tail on an English dog?
Think about it. A lot.
As a non-economist Sassenach living north of the border, even I can see that Sterling (GBP) is a non-starter for an independent Scotland. You’re 100% right that Scotland will need its own currency right at the onset of independence … and given that we already have Scottish bank notes in circulation (Bank of Scotland, Royal Bank, Clydesdale Bank immediately come to mind), would that be such a leap to make?
All hail the ScoP (Scottish Pound)?
I am afraid the leap from Scottish notes is very big – because they are sterling, and not really Scottish at all
Do the Scottish banks rely on sterling now? Some of them produce their own bank notes, like RBS.
Can they not just do what the Bank of England does, but call it the Scottish pound instead?
I know when I ran a guest house in York that a lot of businesses would not accept Scottish banknotes. No idea why if they were just part of Sterling.
To issue those so-called Scottish notes they have to deposit a pound with he Bank of England for each pound issues
Those notes are identical to BoE banknotes as a result – even if usually refused in England
I think that Ian Anderson’s point was that the Scottish population is familiar with our own bank notes. Yes, there are technical differences and processes to overcome, but most folk are not that interested. I think the ‘Scottish Pound’ would be accepted as another step to Independence by the general population, it’s the ones who erroneously claim some economic ‘knowledge’ (ie they have swallowed the auld neoliberal lies) who will kick up a fuss. Sadly this includes most of the ruling clique of the SNP.
Polling suggests your contention to be true
There is a fundamental problem with the SNP’s independence approach. They want to the benefits of being in the EU and independent. To achieve the full benefits of EU membership and independence then Scotland needs its own currency first.
It is fundamentally not possible to be in the EU and independent by using another countries currency. The SNP need to recognise this and produce polices which do not conflict with reality. Which can then be proposed as a coherent offer on independence to the Scottish public.
There are two related but different issues. The first is what text that works politically should go into the Prospectus for the referendum (or whatever other vote) there is on Independence. The only text that actually works in that political campaign is: Scotland will introduce its own currency ASAP after Independence Day. Work will start on the central bank, notes and coins, S£ interbank payments system and other preparations the day after a vote is won. That is to ensure the post-independence government is in a position to introduce the new currency. That post-independence government will decide on the exact timing and procedures in accordance with the decisions of Parliament.
That is impervious to attack from the NO side, and it is not anti-democratic by trying to tie the hands of a future government with spurious ‘criteria’ (aka the No Growth Commission 6 tests), or idiotic ‘fiscal rules’ (such as the EU No Growth and Instability Pact).
The White Paper simply sets itself up for destruction in the campaign. All the NO side need to do is wait until maybe two months before the vote (when it is too late to change the plan) and then have the Chancellor go on the TV and say that in the event of Scottish Independence he will instruct the Bank of England to disconnect Scotland from the UK Payments System and to freeze the Reserve Account of any Scottish domiciled bank, at one minute past midnight on Independence Day. The Sterlingisation ‘plan’ then collapses as a smoking ruin. “So what is your Plan B, Nicola?” in the TV debate.
Whether rUK would actually do that in reality is irrelevant as they only need to say they would. Same as 2014. There probably would have been a Currency Union because it would have suited London, but they only needed to say there would not be.
The other issue is what really happens two to three years AFTER the vote when we get beyond Independence Day. That may or may not be the same as what was in the Prospectus because it is quite a long time, things change, and it will certainly be after another Holyrood election so a different government. However, it is certain the economics will dictate that Scotland will have its own currency. That will either be planned and controlled in a plan similar to that of the Scottish Currency Group (3500 members now!), or it will be a Slovak style chaotic new currency because an attempt to use Sterling has collapsed in disarray. It will, though, be a new currency come what may.
See our second Road to the Scottish Currency report (the Q&A) here: https://irp.cdn-website.com/8274bfd1/files/uploaded/SCGv3.pdf
Thanks Tim
Agreed
I have not seen a detailed plan (if there is one, please post a link) that says economic policy if/when independence is achieved will be any different to anywhere else (austerity lite?) with or without a Scottish Currency.
Even if it is detailed as a 5/10 year plan, with with legitimate post independence finance questions answered.
On a side note, personally, I really do not think there will be a referendum in October 2022, however I would say that there is a strong possibility of one before the end of this decade.
Even though 2014 wasn’t that long ago (to me anyway) a lot has changed both nationally (UK) and internationally.
There is the Groth Commission for 2018 and now the report published a couple of weeks ago by the Scottish government, both deeply neoliberal in tone https://www.gov.scot/newscotland/
So pretty much the same as everywhere else in the world then….
Do you think that sometime in the future at least one of the world’s major economies will move away from Neoliberalism?
Yes
Undoubtedly
Do the SNP Leadership truly want independence – that’s the real question? If they don’t the policies they put out are irrelevant.