to ask why the Yes campaign in Scotland wants to keep the pound?

(142 Posts)
grovel Mon 14-Apr-14 15:32:50

That's it really. Surely an independent Scotland would want its own Central Bank setting interest rates etc?

OldLadyKnowsSomething Mon 14-Apr-14 16:15:56

Because it was decided, by a panel of economic experts including two Nobel prizewinners, that a formal currency union would be the best plan both for iScotland and rUK.

This is because retaining the £ will save businesses both sides of the border millions every year in transaction costs, as well as meaning less faff for ordinary folk crossing the border to visit friends and family, or to holiday. As rUK and Scotland are major traders to each other, the advantages to businesses (and therefore the economy) were judged to outweigh the disadvantages of not having full control.

There are, however, other options.

caruthers Mon 14-Apr-14 16:19:07

I doubt they will get to keep the pound.

PigletJohn Mon 14-Apr-14 16:24:21

Because it will be difficult and expensive for them to maintain their own currency, or to join the Euro, which was previously the preferred option.

However monetary union with rUK is not available without the consent of rUK, which is not offered, so monetary union is not on the table.

The voters of England, for example, do not want currency union with any foreign country.

OldLadyKnowsSomething Mon 14-Apr-14 16:39:39

Joining the Euro would not be an option for iScotland; it is a key requirement that one's own currency (which we wouldn't have at that point) must be in the EU Economic Regulatory Mechanism for at least two years prior to consideration.

PeachandRaspberry Mon 14-Apr-14 16:41:24

As rUK and Scotland are major traders to each other

I think you mean that rUK is a major trader to Scotland? It's not the other way about.

PeachandRaspberry Mon 14-Apr-14 16:42:34

I've written that very confusingly. Scotland does most of its trade with rUK, not the other way about.

ellawithaspecialnose Mon 14-Apr-14 16:46:54

I doubt they will get to keep the pound.

Caruthers, it's not a case of anyone 'letting' us. Ireland used the pound, while not being in a currency union, for 58 years.

caruthers Mon 14-Apr-14 16:49:41

ellawithaspecialnose which ever way you want to dress it up......this govt say you wont be having it.

Hence my comment.

There's always the Groat?

SantanaLopez Mon 14-Apr-14 16:53:59

Caruthers, it's not a case of anyone 'letting' us. Ireland used the pound, while not being in a currency union, for 58 years.

Yes, but the implications of being outside of a currency union wouldn't be great.

The White Paper explains why the SNP want to keep the pound
1. the UK is Scotland's principal trading partner accounting for 2/3 of exports in 2011, whilst figures cited by HM Treasury suggest that Scotland is the UK's second largest trading partner with exports to Scotland greater than to Brazil, South Africa, Russia, India, China and Japan put together

2. there is clear evidence of companies operating in Scotland and the UK with complex cross-border supply chains

3. a high degree of labour mobility - helped by transport links, culture and language

4. on key measurements of an optimal currency area, the Scottish and UK economies score well - for example, similar levels of productivity

5. evidence of economic cycles shows that while there have been periods of temporary divergence, there is a relatively high degree of synchronicity in short-term economic trends

ItsAllGoingToBeFine Mon 14-Apr-14 16:54:03

Caruthers Unless the UK government decides to turn sterling into a non-tradeable currency any country in the world can use £s. This is not the same as a currency union.

Sallyingforth Mon 14-Apr-14 16:55:16

As ella correctly said, an independent Scotland could continue to use the pound if they wish - any country can do so.

The significant point is that without a formal currency union Scotland would not have any say in how the pound was managed - most significantly the Bank Rate.

This lack of input to monetary control would make it almost impossible for them to manage their own economy as an independent country would need to do.

Sallyingforth Mon 14-Apr-14 16:56:12

Xpost with the others!

OldLadyKnowsSomething Mon 14-Apr-14 17:04:33

Haven't read in-between posts, but I should have said Exchange Rate Mechanism, not Economic Regulatory Mechanism in my last post.

<back to peeling the tatties>

Roseformeplease Mon 14-Apr-14 17:04:54

Salmond is trying his absolute hardest to pull in as many people as possible and he thinks insisting on keeping the pound is a way of attracting more voters, even though it is not happening.

A vote for Salmond is like voting for better weather. It might happen - it has happened before, but it is in no way guaranteed, nor can independence make it happen.

He is also wanting to keep anything he thinks will win him votes.

ellawithaspecialnose Mon 14-Apr-14 17:10:35

A vote for Salmond ...

Roseformeplease, this referendum is NOT about voting for, or against, Alex Salmond. It's about choosing whether to take control of our own affairs, or to accept that we will frequently not get the government we vote for. Why any Scot would choose the latter is beyond me.

weatherall Mon 14-Apr-14 17:13:09

A couple of weeks ago there was a leak from a UK government minister (wonder who?) who said that there would be a currency union.

Of course BT are saying no to the currency union now. They at trying to scare people into voting for them.

The UK government signed the Edinburgh Agreement agreeing to negotiate in the best interests of Scotland and rUK. Therefore they will be in breech of this agreement if they block the currency union.

But for me it's a moot point anyway. I'd be voting Yes regardless of currency union/dollarisation/euro/own currency. Scotland is strong enough to still be better off with any of these options over the status quo.

Roseformeplease Mon 14-Apr-14 17:15:39

Not a Scot, not sure why you would make that assumption.

Oh yes, because if you want to keep the Union, then you must be anti-Scot according to Salmond's acolytes.

This whole business is a dreadful, frightening thing. It will cost every household huge amounts of money. It will turn us into a tiny, tiny country in a big world. It is divisive and unnecessary.

And, the last time I looked, we lived in a democracy. You have one vote, same as anyone else. Oh no...actually, you have more than one because you also get to choose an MSP who is in charge of huge parts of everyday life in Scotland.

The White Paper is a work of speculation, hope and fiction....Salmond will say anything he can to get people to vote for something which is irrevocable and will be hugely damaging.

SantanaLopez Mon 14-Apr-14 17:16:01

The UK government signed the Edinburgh Agreement agreeing to negotiate in the best interests of Scotland and rUK. Therefore they will be in breech of this agreement if they block the currency union.

This is complete rubbish. The Edinburgh Agreement said that the result of the referendum would be 'decisive and respected'. It also said 'The two governments are committed to continue to work together constructively in the light of the outcome, whatever it is, in the best interests of the people of Scotland and of the rest of the United Kingdom.'

It does not say that 'we will give the people of Scotland everything that they want!'

The UK is only bound to negotiate for its own people. Not Scotland's. The currency union is out.

ellawithaspecialnose Mon 14-Apr-14 17:19:08

Roseformeplease so sorry you have been scared into believing these things. What makes you think "*It will cost every household huge amounts of money. It will turn us into a tiny, tiny country in a big world. It is divisive and unnecessary.*"?

Roseformeplease Mon 14-Apr-14 17:23:10

I have been scared into believing.

Oh, so Yes voters are sensible, grown ups.

No voters are scaredy cats who believe something?

Really?

I am an intelligent, well read Scottish resident. I have researched widely (and not just on Wings Over Scotland or the other "neutral" sites run by SNP supporters) and I will be voting NO.

No because I want to remain part of a social, political and economic union and No because the White Paper is a work of fiction supported by few businesses, few economists and no people with any sense.

prh47bridge Mon 14-Apr-14 17:24:50

Yes, any country can use the pound. However, unless there is a formal currency union the Bank of England would not take Scotland's interests into account when deciding monetary policy, e.g. setting interest rates. Also an independent Scotland that was not in a currency union would not have recourse to the Bank of England as lender of last resort.

This last part is the main reason all three major parties have ruled out a currency union. If the Bank of England had to bail out the Scottish government the costs would fall on rUK taxpayers.

A couple of weeks ago there was a leak from a UK government minister (wonder who?) who said that there would be a currency union

No. The minister concerned suggested that a deal may be possible whereby Scotland continued to host nuclear submarines in return for a currency union. The source is unclear but may have been the Defence Secretary. Personally, even if an independent Scotland was willing to consider this, I do not think such a deal would make economic sense for rUK.

The UK government signed the Edinburgh Agreement agreeing to negotiate in the best interests of Scotland and rUK. Therefore they will be in breech of this agreement if they block the currency union.

Rubbish. The Edinburgh Agreement contains no such provision. The government's simply agreed to work together to ensure a referendum will take place. The agreement says nothing at all about what will happen after the referendum. And you are assuming it is in the best interests of rUK to enter a currency union. If saving business money on currency exchange is the motivation rUK would be better off entering the Euro or using the US Dollar since rUK trades with those countries far more than with Scotland.

withextradinosaurs Mon 14-Apr-14 17:40:54

Scotland had the pound before Union - that's why Clydesdale and other Scottish banks issue their own notes.

So why does the Bank of England/English government get to say whether or not Scotland keeps its own currency?

PigletJohn Mon 14-Apr-14 17:45:50

the Bank of England/English government have no desire to say whether or not Scotland keeps its own currency, and that is not under discussion. An independent Scotland can use groats, cowrie shells, or can use pound or Euro coins if it wants.

The point at issue is that an independent Scotland might prefer to have currency union with an independent rUK.

The voters and government of rUK, and the Bank of England, don't want it, aren't offering it, and won't accept it. As an independent nation, it will be their right to decide if they want to enter into a currency union with a foreign country.

caruthers Mon 14-Apr-14 17:47:09

withextradinosaurs they can keep the pound but will have no control over it.

Westminster will do what's best for what's left of the union.

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