New currency options explored
Posted on
March 01, 2014 by
Chris Cairns
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Several of us had a chat in work about the merits of declaring a plan B. I’m all for sticking with plan A until the point in the negotiations where they really do cut off their nose. My colleagues suggested this was an untenable position for undecideds.
As a committed YES, I find it hard to imagine how the undecided might view this. The Fiscal Commission Working Group published plans A-E, if we choose a B, BT will just start to attack that. I say give them nothing else to attack.
Does anyone else have a similar view to my colleagues?
Why do YES have to come up with a Plan B… when NO have not even got a Plan A?
(Rhetorical question)
@themadmurph
Its a no brainer in any negotiation – dont show your hand ever.
Plan A till we know if they are really that stupid just to make a point; and by default harm their own business. If they want tantrums & stupidity then fallback to ‘no offer to share UK debt’.
‘Pound Stirling’ as currency just to annoy them & trade in own money as Norway. Will be fine in the end.
I think Alex is right to stick to his guns, until some new information comes to light!.
I have to ask, when Scots Pound is already treated as separate, what have we got to lose?
I may be green as I’m cabbage looking, but it seems obvious
themadmurph
My view same as yours.
A neutral (not from UK and has no vote) friend of mine who is interested in finance, markets, etc did say to me that he thought a Plan B would have to come out sooner rather than later.
Maybe it’s dependent on events in the next few months. The Scottish government can’t be seen to being forced to play its hand, e.g. by reacting to bad news.
The Standard & Poors ratings report on Scotland was supportive of a Scottish currency.
Maybe the Scottish government could show 2 (maybe even 3) currency options with the steps required and the ultimate path being influenced by the extent of cooperation from the rUK government? It could cover all possibilities.
The unionists would look even more foolish if they argued that an independent Scotland would be the only country on earth unable to introduce a system of paper currency and metal coins.
YES is a vote for Scotland – No is a vote for London rule
This is truth, no one can argue with it, and it is at the heart of referendum. All the other stuff is junk!
I thought it was Plan McB anyway?
@themadmurph
I can empathise with you. I have wanted Independence since I was politically aware in my early teens. That’s a long time ago 🙂 I simply can not understand why the minutiae that ANY state has to deal with (and I consider the currency, NATO, EU etc. as “details”) suddenly becomes a reason to say NO. Perhaps it’s me who is simply unreasonable?
But the danger of publicising a Plan B is exactly as you state, it would simply become the next target.
It feels uncomfortable, but despite this, apparently if the polls are correct, the currency is NOT the most important thing to people. So with that in mind, holding out for a bit longer to draw the remaining ‘fire’ from the “dambusters” seems an appropriate strategy.
Let’s not forget that YES had apparently built up a “war-chest” of £10 million! A massive publicity campaign is in the offing, and I hope will include some “hard truths” that the undecided need to be aware of.
Keep the faith
themadmurph – totally agree with you. Also, if the SG produce a plan B, then BT would just rubbish that and ask for plan C-Z, which they would also rubbish, in spite of other options detailed in the White Paper.
Wonder what George O found out on sojourn East to examine the operation of Currency Boards and CUs. He maybe now realises BT/WM have shot themselves in the foot financially, and backed themseves into a corner, by being so negative about the proposed CU. (I still think plan B was always plan A,though :-))
seen a guy in stirling today wearing a wings over scotland top.
Yes, stick with Plan A. But the undecided that I know cannot move beyond this currency issue – it’s hard to convince them.
Fucking love it!
But aye, as themadmurph says, if we announce a Plan B, then BT start attacking it as if it’s a de facto Plan A. They’re not going to go “oh well, that’s actually quite reasonable.” Absolutely nothing to gain.
I think Salmond is playing a long game.
Don’t frighten the horses at this stage.Lots of time before the vote.Depending what Westminster come up with I think he’ll go with a Scottish unique currency & no debt.
True independence.
Also, I think the CU was only ever suggested as an interim measure for the short term. I wonder if that’s the problem WM have with it. I remember Kirsty Wark screeching at John Swinney or ALex Salmond ‘will you commit to the CU for 40-50 years, will you, will you, will you.’ Seemed odd at the time, as we’re being denied a CU, we’re being harangued to commit to one for half a century.
This argument for the union is very confusing – thankfully, I don’t care. 🙂
Hahah, nice one Chris.
Agree, SG should stick to it’s guns. If Westminster, having painted itself into a corner and encouraged public opinion agains a currency union, whilst the SG is reasonable and puts out olive branches and reasoned arguements, then I’m afraid no share of assets = no liabiliies. Quite happy with that.
apologies for errant apostrophe, etc.
I’ve always thought the ways things will turn are, hold steady for Plan A, with the rUK 99% dismissing CU. The strong points for SG are walking away with no debt, and the decrease in the balance of payments for rUK. If the rUK still maintain no CU option, then Plan B is sterlingisation, and prob for a period of a few years. Then introduce Pound Scots or (and i like this one) The Merk at parity. All gov contracts paid in Merks, both currencies run concurrently for a period and then Sterling handed in for Merks by a certain date. To go straight to a new currency would scare the horses. Better to wait a while methinks.
Question for others… If sterlingisation occurs, does Sterling retain its strength in terms of Oil and exports etc or does that only occur with a formal CU? If the latter then perhaps better to only have Sterling for a short transitional period
Should HMG deny Scotland’s currency plan after independence vote, then UK financial markets will implode AND THAT AINT GOING TO BE ALLOWED TO HAPPEN. HMG will NOT be allowed to unsettle the markets under any circumstance. The good old USA will have told them (HMG) already how long (max) they can play this silly game of bluff. Just the same as the EU bluff and the NATO bluff. HMG will be told to shit or get off the pot, by the world financial markets before any permanent damage is done to the markets, if someone hasn’t told them already how long this game can run, Obama!
Alan Mackintosh – I think if we were in the CU, then all Scotland’s profits including oil, whiskey etc, accrue to WM’s balance sheet but not if we just peg to the pound. Others more knowledge than I on this subject, may have further clarity though.
Have to stick with CU; any change will be ridiculed at this stage. Just imagine the media.
In any event we can trade own currency, Scots Pound or Merk
its just the SG dont want to startle the horses of business community and it does make plenty sense as interim measure for 10yrs say. Ten years after who knows?
Still think we should call our currency the ‘Pound Stirling’ as opposed to Sterling just to piss them off.
When UK govt said they would nationalise / privatise coal / electricity / telecoms / mail and somebody said they couldn’t what was their plan B? Correct, they didn’t have one. They just insisted and insisted and eventually the others gave in. Because they were the democratically elected government and their aim was not unreasonable.
Yes I know it keeps sterling up in a CU, but wondered how it would affect it if we used sterling outwith CU. If sterling or rUK weakened by loss of payments on their balance sheet, then potentially sterling is something to ditch as soon as practical
Yes voters know that the currency question is a process of negotiation. It’s a poker game between London and Edinburgh in which Edinburgh holds the two best cards: Firstly our oil, without which a purely rUK currency would be much weaker, and secondly the option of refusing to assume some of the UK’s vast debt.
No voters still believe that the UK has the power to ‘deny’ us the use of the pound. The poor wee souls believe that Westminster’s authority over Scotland will continue even after independence.
So we have two tasks when talking to unionists: First, to convince them that London’s current stance is not doctrine written on tablets of stone but merely a bargaining position. Second, to convince them that independence means that we’ll no longer be told what to do by London!
Think plan A is just the SG putting up something the No camp will say no to all along, same as the Devo Max question on the ballet paper and the “should there” question. It has all been sussed out before hand.
A Currency Union would as the SG says be in both countries interest, but we would only remain in it as long as it suited us, the debt is not an issue, either we are a joint continuing state and get share of assets/debts or we are not and we don’t get a share of assets/debts, either way its not going to make much difference as the assets should unless the UK is already balance sheet bankrupt be more than the debt (Not by Much!) However continuing state status gives us a lot more muscle for negotiating with Europe etc.
Either way I have a lot of faith in the SG getting the tactics right and Im sure they will continue to play a blinder.
O/T this video is interesting , Brian Donohue apparently does not know the name of Labour United’s press officer, incidently Mr Donohue was representing Labout (Dis)United last night, and sorry Ian Brotherhood , Mr Sheridan appears in the video so close your eyes and turn down the sound for the first five minutes!!!
I too think we should keep saying plan A. If any other plan is muted it is being set up to be crushed by all and sundry. Better to stick to plan A until there is no choice but reveal plan B.
Seen a guy in Stirling today wearing a wings over Scotland top.
Anywhere in public where you are in the proximity of 17 voting age adults, probability says one of them read wings recently.
Was only just over 2 years back you’d need to be standing in a crowd of ~700 for the same, assuming similar pages views per reader.
Growth following an exponential type relationship. 19 million page views possible by September based on continuation of the existing trend.
MajorBloodnok says:
apologies for errant apostrophe, etc.
You missed the ‘t’ at the end of ‘agains’ too. Rev may have to step in soon.
😉
THEMADMURPH
Yes
Part of their tactics was to sledge Plan A and see if AS had a plan B.
He does, but it will only be used they don’t allow Plan A to work and it will be their suicide pill.
Plan A as the no side are for a fall when the markets see that a Yes is likely then the UK will have to announce that a currency union is in all of the UK best interest, otherwise the £ will come under increasing pressure.
The cards are all in our favour and the UK know it as military intervention, their favoured/usual tool, is confined to barracks.
If we ever get to Plan Z+1 here’s how simple it is ….
https://www.positivemoney.org/how-money-works/advanced/how-central-banks-create-money/
I don’t think we have any problems with our future currency. Alex Salmond has always said from day 1 that he thinks a Currency Union is best for both countries. The problem lies in the lap of Osborne and co. NOT with the Scottish Government’s lap. 😉
I do seem to remember that Alex did say at one point recently that if there was indeed no C.U. then we would still carry on as normal and use the pound as our currency. However, as there would be no currency union then of course Scotland would not take her population share of Westminster’s £1.6 Trillion debt. Of course no one in the unionist supporting media will report this because they know damn fine that to do so would blow a massive hole in the no C.U. argument from Osborne and co as they would be left holding ALL the £1.6 Trillion debt and we all know how well that news will go down South of the border.
So long as Alex keeps to his argument that a C.U. is best for both countries I think that he is pushing the unionists into a very tight corner. They can demand answers till the cows come home regarding his plan B but we already know what his plan B is, they just don’t like the sound of it. The longer he refuses to repeat his plan B, use the pound without Westminster agreement and NO debt share, the more desperate the unionists appear. The more desperate they appear the more pathetic and ridiculous they appear and ultimately the more people who are undecided or even NO supporters will move to supporting YES. 🙂
What is significant, in my view, is that we have someone on our side who is a trained economist who knows what he is talking about as opposed to those on the other side, none of whom are trained economists and ultimately have no idea about what they are talking about.
Slightly O/T – does anyone have a link to foreign currency exchanges that trade ScP at a different rate to the GBP? I had a look the other day but gave up after a while.
I know that there are some bureau de change that offer a good rate (UAE and Hong Kong from memory).
@tonylittle
That’s my story too. 50 this month and waited my whole life for indy. Like you, I believe beyond the YES, everything else is either policy or negotiation.
We can’t allow WM to bully and frighten us to a no vote. After that we will get a kicking!
@jingly jangly
Cheers for that Labour only happy for the BBC to protect them.
@Jim T
Aye it was HK that gave more for a Scottish pound in the exchange.
I thought the use of the words “highly unlikely” re a CU – is because as there will be a no vote (snigger) there will be no need for such a thing, or am I still not getting this ‘How Politicians Speak’ thingy?
@jingly jangly –
Thanks for posting that – more good work from Clan Destiny Films.
What a buffoon Donohoe is, and arrogant with it.
Regarding the debt. Dont forget that the BofE hold about £350B of bonds so the actual debt is not £1.2T. And we notionally have a share of that asset( BofE), so the debt levels talked about are significantly different form the figures being chucked about. This was discussed in an article on Bus for Scot
O/T Another quite amusing offering from National Collective. Find out how to grow your own BT activist from seed and other useful tips and hints
http://nationalcollective.com/2014/03/01/blair-mcdougall-introduces-the-national-collective-zine/
Could it be old mother Westminster Hubbard don’t want a CU because they don’t want the SG to find out the auld cubby is bare?
Darling did leave a note after he left office AND as the day nears he gets more and more nervous, something is wrong at the treasury and i’m sure AS knows this. A great bargaining chip if you’re the only one holding the chips.
Cracking cartoon Chris – hope you’re going to be illustrating the upcoming wee blue book.
Chris, it wisnae the Rev, it was Hamish’s steely gaze and pointy paw whit done it.
Can you do a Hamish with all the curlicues necessary to get him on the banknotes?
I’m in agreement with the “stick with plan A” line, at least for now. It’s not tenable for the Westminster parties for a whole variety of reasons. Not least that the Tory deputy leader in Scotland has already admitted he’d be “manning the barricades with the SNP” for one after a yes vote. So will most businesses in Scotland who have also already made that clear. So what’s Labour in Scotland’s view about it? They’re banging on about how much they want to keep the pound, while at the same time rubbishing the idea of keeping the pound if we get independence! I’m not sure they can keep that up for 7 months.
But meanwhile, those who support a Scots pound should be working hard, along with the Fiscal Commission, Scottish government etc to devise a a very solid plan B which can be brought out nearer the time.
Chances are the Westminster parties will be forced to back down long before September. But if they don’t, that plan B can be combined with the debt free idea, and become plan A, but on the understanding that once done, it’s no longer up for negotiation after a yes vote – it would have been adopted because it’s clear there will not be negotiations on it. That would be risky unless the polls are looking very good for yes though!
The idea that Scotland can just ‘walk away’ from its share of the national debt – whatever currency it ends up using – is a total fantasy.
The SG are in it to win it and know Westminster’s weak points and currency is their weakest and now back to nostalgia.
http://allpublicdomain.com/ranger.html
Stick to plan A. In Scotland how many people do you think believe and trust Osborne, or treasure Cameron’s words of wisdom? Also the general public will have little understanding of or interest in currency. Assurances on social security and pensions supported by straightforward financial facts on which country provides the financial subsidy is the line I take when leafletting. And I invite them to check it out for themselves rather than accept or reject my word, giving them an Aye Right leaflet to help their search.
an observer – who signed for the debt? Westminster that’s who – so international lenders will expect it back from … guess who? Why Westminster of course. You can’t have it both ways – the world is watching and the world is well aware of what British Governments are like!!
AS is absolutely right to stand his ground on this issue. WM are running a huge risk by trying to pre-negotiate, in a way that could easily upset the markets (who surely don’t need telling which currency option is the best all-round solution). I’m convinced that WM will blink first.
(No, actually, the markets will blink first.)
From his mutterings in the Clan Destiny film as linked above, it seems Brian ‘Is that Yer Ayrshire Bacon?’ Donohoe will be part of the line-up on Taylor’s All-Star Roadshow in the Harbour Arts Centre, Irvine, next Friday.
Just checked Taylor’s BBC lair, and the gig hasn’t been flagged as ‘capacity filled’, so there may be some spaces left.
I would apply, but it’s pointless. I can’t even complete the application form honestly without exposing myself as a SSP member – which is fair enough – but to then expect the chance to ask a question would be plain daft.
Anyone up for it can find the application form here:
http://www.bbc.co.uk/news/uk-scotland-scotland-politics-15190428
A good question might be: ‘Mr Donohoe, why did you veto filming of your debate with Tommy Sheridan in the Volunteer Rooms a week ago?’
@an_observer – Westminster’s Scotland analysis has decided that Scotland will not be a successor state but a new state, to mitigate this assertion(i don’t agree with it) the SG have proposed a currency union in the good faith that if we get our share of the assets we also take our share of the liabilities. The SG must stand firm on this and Scotland will be under no obligation to take on any debt if she doesn’t get a share of the assets.
If only WM would accept the same status as Scotland instead of insisting on being the continuing state. If Scotland can lose any/all debt obligations from becoming a seceding state then surely England could do same? Neither Scotland nor England would be liable because neither would be named on the debts. Just wondering like.
The idea that Scotland can just ‘walk away’ from its share of the national debt – whatever currency it ends up using – is a total fantasy.
Cool. So you are saying Scotland can just print $almonds out of thin air to pay off the UK? Nice.
Sorry, only way an iScotland can pay Sterling debt is in a Sterling zone.
You haven’t thought about this have you. Try engaging your brain briefly and it might go click for once. I say might. No guarantees.
@Barry Blust
The No’s would argue over the colour of sh*te. This is why they are called Onionists. Peel one layer off and guess what! There’s another. Ach well, the joys of union.
I’m away to wipe away the tears, I’ve had enough Onionism for one day. 😉
Cath
Plans A to D were explored by the Fiscal Commission They will have it all worked out in detail.
Even with a currency union, there will not be a big share of the debt to service. unless the UK is already balance sheet bankrupt then the assets should be more than the liabilities. Last time I looked Im sure the Govt assets were stated to be just above the liabilities, in 2005 Scotland was shown to have 23bn worth of assets, say its 30bn now, so the 30bn or so which is our share in the “paper money” owned by the Govt to the Bank of England
should cancel that out, the rest of the debt will be cancelled out by the assets that we own, this is one of the reasons they are trying to say we are not a successor state so that we cannot claim our fair share of assets, but they want us to take on servcing their debt!
We have got them by the short and curlies…
You can only sensibly pay off Sterling debt if you have an equal / proportional share of any sterling ‘created’, either electronically, or via the printing press.
Such is the nature of fiat currencies.
An iScotland not sharing a Sterling central bank could not create Sterling. Ergo, it can’t be expected to pay sterling debt.
We have got them by the short and curlies…
Quite. And the Scottish government are playing nice. If Westminster doesn’t, well that’s their problem.
No shared currency/central bank = no access to created sterling = no paying of sterling debt.
I do not think there is any requirement for the Scottish Government to outline their “plan B” because they do not believe that Plan A is off the table. That is reasonable for now
What I do think essential is to make plain that without currency union we will not take a share of the debt and that is because we cannot afford to take such risks with an independent scottish economy
The decision about currency union is for the rUK to take, and we cannot control that. But they do need to understand that that decision has consequences which are inevitable: foreign denominated debt is not an option. That is not a threat nor a retaliation: it is merely an outcome of a particular rUK decision, and the rUK electorate have a right to that information, as much as the Scots do.
Such a plain statement might be seen to imply that an independent currency would follow; but using sterling as a tradable currency is not ruled out by such an announcement, though it does not make much sense to me.
But however that is seen there are good reasons for setting that consequence (non acceptance of the debt) out clearly,and for making the reasons plain. It will also allow rUK some wriggle room, if it is truly believed currency union is in the best interests of both countries, and I accept that is what the Scottish Government do believe. The rejection of currency union was portrayed as final, and to row back from that will be politically difficult unless the rUK electorate can see a reason for revisiting that decision: and the fact that Scotland must not take the debt without currency union is such a reason. From what I have seen of unionist comment they do not understand that these two things are enmeshed and are encouraged to think that they can refuse CU and yet expect Scotland to accept debt in sterling. The connection needs to be spelled out properly, no matter what else is said or not said
I would really like to know what the other parties propose about currency in the event of a yes vote. They have rejected currency union so what is their plan? We need to know that, just as rUK voters need to know that we will not take debt without the CU
Westminster 1st mistake was stopping Devo whatever on the ballot through blind arrogance its 2nd mistake has been over the currency union again in its arrogance that a no vote will prevail. I am finding it quite funny how the unionists of the greatest empire that this planet has ever seen be ridiculed by the SG and the cybernattery now back to my nostalgia film chuckling.
The polls will decide the currency.
They will decide who blinks first.
If a victory for yes looks likely the markets will start blinking faster than Darling’s eyelids would after a caffiene overdose and inadvertently answering a question truthfully – on camera.
Alan Mackintosh
Perhaps I genetically incapable, but I couldn’t find the guide on how to grow a BT activist from seed. To say I’m disappointed. 🙁
an_observer says:
The idea that Scotland can just ‘walk away’ from its share of the national debt – whatever currency it ends up using – is a total fantasy.
Perhaps we should let Stu answer this one folks. 😉
Rev. Stuart Campbell says:
“This implies you think the threat to renege on debt which clearly belongs to Scotland is credible.
I think it’s risible. So does the rest of the world.”
Sigh. This, for the thousandth time? Must we?
Scotland has no debt. It cannot therefore “renege” on it. If you don’t pay your rent and the landlord then can’t pay the mortgage, the bank comes after him, not you.
You can assert to the contrary until you’re purple in the face, but nobody’s buying it, so why not save your breath? It’s really boring.
(Also: if Salmond didn’t get a currency union but took on £150bn of UK debt anyway he’d be chased out of Scotland by a howling mob with pitchforks and flaming torches, and I’d be in it.)
I don’t think there’s much else that can be said really. 😉
Really good piece in New Statesman on February 28th on this. I get the impression they think Osborne’s actions on currency could seriously backfire and that currency is up for negotiation post a Yes vote.
http://www.newstatesman.com/politics/2014/02/flaw-osbornes-pre-emptive-strike-against-currency-union
I’m with Plan A. It’s all there is for BOTH sides. We will all want/need a stable currency and Plan A is what will give us that. rUK WILL HAVE NO OTHER OPTION unless they are going to crash sterling to spite us. Simply not going to happen.
Jingly Jangly – thanks for the vid. Sheridan very accomplished speaker (sorry Ian :0 ) Donahue obviously under pressure and defensive. I liked the bit:
“Let me just answer the question. Don’t talk over me, there’s not much point in doing that. If you’re asking a question then you wait ’til you get an answer, then you ask another one. That’s the way you deal with things.”
I hope this os going to be a labor policy and that Johann Lamont will adhere to it.
BTW Was at Nat central in W Aberdeenshire today with Rab C plotting the downfall of the union. Good day. The downfall’s on the 19th September – just so you know. I passed on your message about contributing to Wings. He just laughed. 😉
It’s a game of bluff and counter bluff at this stage. Big scary question for the Tories (=Labour=Lib Dem) is that perhaps what Salmond flashes in front of them as Plan A is actually Plan Z, and he’s going to pull Scotland out of sterling at the first opportunity. Bit like knocking a big hole in the bottom of Gideon’s canoe, and watching him sink. Must be awfully tempting.
In three months time Westminster the most common phrase will be “Oh shit”. Let them stew and stab each other in the process and bye bye Trident before this decade is out.
CameronB, scene 7 of the cartoon, bottom left corner of the illustrated page.
http://nationalcollective.com/2014/03/01/blair-mcdougall-introduces-the-national-collective-zine/
“Frustrated by the lack of genuine grassroots activists in your political movement? Worried about finding the cash to buy more? PROBLEM SOLVED! And so on… 🙂
The white Paper outlined plans A to D.
As Scotland holds aces in that UK refusal of Plan A means No debt for an independent Scotland plus RuK will need to take Trident back there is no need to concede anything at the moment.
If we vote Yes in September how are Osborne and Balls going to explain to English voters six months later in the last ever UK general election that if you vote for me Ruk’s balance of trade will double, £130 billion will unnecessarily be added to our National Debt and £400 millions added to our businesses through transaction costs.
This is a game of poker and Scotland should not blink first.
What is “Scottish” Labour’s position as part of Scotland’s negotiating team after a Yes vote?
Our state broadcaster should be asking them this at every opportunity.
Scotland has NO SHARE of the national debt. This is a BT lie to frighten people. As is the pretence of Scotland portrayed as a defaulter position. Scotland HAS NO DEBT – say it loud and clear – Scotland HAS NO DEBT. This is an absolute fact that cannot be refuted and has already been confirmed by the UK treasury. Anyone repeating this lie is revealed both as a BT sympathiser AND a liar.
Also the general public will have little understanding of or interest in currency.
Exactly. All the vast majority of people will hear is “you’ll lose the pound” fast followed by “well of course no one can force you not to use the pound, you can keep it but…” and the but then moves onto Sterlingisation and the possible downsides, and to be brutally honest, who the hell understands or cares about the details of that? So people just see lies and bullying. The actual ins and out and pros and cons of the various options is a discussion for technocrats and experts.
Big scary question for the Tories (=Labour=Lib Dem) is that perhaps what Salmond flashes in front of them as Plan A is actually Plan Z,
Aye, I have to say when there’s something Salmond seems to really want, or really need, and it can only be delivered by his arch enemies, I always tend to suspect it’s something he’d wouldn’t be too unhappy to see knocked off the table.
Sorry at 10.39 it should read ” Ruk’s balance of trade DEFICIT doubles” in para 3 line 3.
Main point is that Scotland has subsidised the UK treasury for each of the last 32 years.
One day one of independence Scotland will have a balance of trade surplus and a budget surplus.
That’s why Standard and poors says Scotland should have a triple AAA credit rating even without North Sea Oil revenues.
Keep repeating that when asked about debts and bank bailouts etc.
@Linda’s back – too true,I think one of the main reasons they want to keep us bound to the wastemonster is that the big lie will be uncovered for what it is, I think our eyes will water when we find out how much we have been ripped off by this charade of union
There is fundamental inconsistency in the Union argument with this whole issue which is not really being picked up BBC and the MSM.
The Yes point of view with Plan A currency union is quite consistent and logical and it is worth sticking with up to September. What happens in the long term really would be up to the people of Scotland and it’s government which really is the whole point of having an independent government. We can change this to Euro/Merk/Punt, etc as appears appropriate and suits our economy and financial circumstances in ten /twenty years timescales if the people vote for it.
However, what is the rUK going to do after independence if we do not contribute to our share of the national debt?
And why should we contribute to this if we are denied a share of our pound?
I think the rUK economy could is be fundamentally crippled by this additional debt combined with the loss of oil revenues and Scotland’s significant contribution to GDP.
An independent Scotland can do quite a lot with not having the millstone of ~£120B around our neck. So I would be quite happy to down the route if we are forced to. All this rubbish about being a financial liability because we have walked away and have no debt therefore making us unreliable and risky to the money markets is just a ludicrous position.
So aside from questions about our plan B, why is nobody in BBC/MSM questioning the unionist plan A – no currency union – and how it would result in the rUK having to shoulder all the debt burden on its own as an independent Scotland would be quite justified to walk away from it.
This is the real question on the currency issue!
I fully understand the policy of the SG, it most probably the best one and they are playing a blinder. The Unionists are foaming at the mouth to find out what a B would be, we have no reason at all to tell them other than we presently want to.
I fully understand their A, plan, however there is a little something in my head which says, we tried to be nice, we offered to pay a proportion of their debt, yet they refuse our kind offer.
Then bugger it, a currency board pegged on a 1 to 1, ( for me the Sc$- Scottish dollar )AND no debt is the way to go.
We also keep the high ground because we are the ones being reasonable. They are taking very big risks and being very amateurish when trying to blackmail the Scottish voters.
http://www.johnkay.com/2013/04/24/sovereign-scots-may-have-to-drop-sterling
A wee snippet from John Kay’s piece in the FT dated 4th April 2013:
“If I represented the Scottish government in the extensive negotiations required by the creation of an independent state, I would try to secure a monetary union with England, and expect to fail.”
Is our Plan A actually the Scots pound with no debt?
Ok, i may not be university educated, but a banking and hedge fund schooling taught me more than those people. A currency union is not possible without debt union.
European countries immediately flouted fiscal rules for the Euro. The Euro has been awful for smaller economies such as Greece, as the Germans are able to assert control, and they have not had the benefit of a free floating currency to repair their currency through devaluation.
Alex S thinks, with all the other variables, that voters would be too overloaded with info for a new currency (in my opinion)
The only route is a Scottish pound pegged in a tight band to GBP. Here in Hong Kong, we have a very successful economy built around a currency peg to the USD. FX transactions are easy in a high tech world.
Therefore we can create a large amount of money from thin air (fiat currencies when done properly are great, a currency is effectively a share in a country’s productivity/GDP)
We cannot trust rUK to adhere to fiscal rules as their finances are shot and what power would we have to enforce on a country 10 times our size.
We must dump the debt. Eventually the UK will have to default anyway. Noone can service that size debt and all the future unfunded liabilities, and the markets will work this out at some point.
Our peg should generate huge profits as a Scottish oil backed economy flourishes, or at least is more trusted by the markets (S&P think so), if only for a few years, forcing us to sell Scottish Pounds and buy GBP to devalue our currency and keep it in line with the GBP peg. The foreign currency reserves will give us great power.
The most important part is that we will benefit from the current standing of GBP in the markets through being pegged, but we will not be married to an economy (rUK), which has a very dim future.
The banking economic cycle is coming to an end, what does the UK have to offer once all the London property starts to fall?
There is such a great future for Scotland, we need to be flexible.
Vote Yes to Independence for Governing and Currency
The question asked in the first comment is what do you tell undecided voters not what we (committed YES voters) think of it.
My solution is to ask if they have read the White Paper. Point out that plans B, C, and D are there for anyone to read since November – including the media. Ask why, in that case, the media is screaming for plan B.
All of the options have advantages and disadvantages. The most mutually beneficial option became the preferred option so why is Westminster rejecting it out of hand?
If they are not dyed in the wool unionists, it will at least get them to think about it.
The Fiscal Commission doesn’t need to define a Plan B but could outline some sort of algorithm ie prioritise. This might help the politics over the next 6 months.
For me, the decision on currency has to be one agreed on by both parties with all other agreements taken into consideration. The term “off the table” is being used before both sides have sat round the table. Gideon’s high chair does not count as a table and he has thrown his food on the floor without getting a taste of what’s on the plate.
The reason the MSM don’t discuss the other options is that they will try to discredit all of them but at the same time evaluate which one is the best option. Unfortunately they will still conclude the best option is to keep the pound – by voting no.
They point out the uncertainty, and that scares people. They don’t point out that, even with our share of the UK debt, we will still be far better off. How long will the UK keep a AAA credit score when the debt soars over 2 trillion? How long will it be until they default their own debt? They can’t seem to stop the hemorrhaging. Who would you lend to?
Without a lender of last resort are banks going to risk not being able to be bailed out? There should be consequences for letting that happen, and I don’t mean giving those responsible bonuses. That’s why the banks won’t support Yes.
The main problem the undecided and no voters have is that they start off their assessment with currency. That’s why the CU announcement came so early. If you explore the rest of the matters affected by independence first, sharing a currency with a country ruled by Westminster becomes undesirable. Does the price of a transaction cost outweigh the benefits of a country that puts its own interests first?
@David Halley
Exactly, and it’s not just a passive share. When the economy is depressed below capacity, as now, the creation and spending of new fiat currency can boost GDP. This is where people get hung up on inflation; they assume more currency, money, means inflation, but when both money and GDP can increase there’s no inflation mechanism.
The details matter of course, not least the targets of the spending. It’s possible to hit bottlenecks in particular goods and services while there is still capacity in other areas.
I assume you mean in the case of a currency union. If the rUK continues to control the currency it uses then it can run deficits indefinitely, as it has for most of our lifetimes. Which is not to say that the rUK will prosper:
Nothing. Despite all the talk of rebalancing the economy all they’ve done is start inflating another property bubble in London and the south-east. That, a reduction in private sector saving, and one other thing, is driving the thoroughly inadequate ‘recovery’.
The ‘other thing’ is that when the coalition came into office they set about reducing the government deficit. They succeeded in reducing it, from around 10% of GDP to around 6%. They also succeeded in driving the economy back into recession. That deficit reduction ended after the first quarter of 2012, and since then the deficit has held pretty steady at either just below or a smidgen above 6% of GDP.
The government deficit is currently big enough to shore up economic activity — government policy is driving a substantial proportion of the activity in unproductive directions, but that’s a different problem — but not big enough to drive real recovery. The government deficit, the creation of new fiat currency, should be bigger.
@CyberNiall
It already lost AAA from one rating agency, as did the USA. In both cases bond yields went down, not up. Credit ratings are meaningless for nation states which have their own floating currency.
If they keep control of their currency they cannot be forced to default. They might go mad and choose to default anyway, but that’s a whole other problem.
If, on the other hand, they lose control of the currency they use, by joining a currency union with Scotland for example, they would find themselves in the same position as the Euro nations with large external deficits. That’s why they can’t agree to a CU.
I agree, but I’d expand it by saying that independent nation states should always have their own currency. Acting in the interests of the people requires flexibility to respond to shocks, and to changing conditions generally. An export surplus can provide similar capacity, but even an apparently secure surplus can itself be lost, as Japan is now discovering. Nothing else has the flexibility of a fiat currency under the control of the nation in which it is used.
The answer is no, and it’s an answer that can be seen with appalling clarity in the Eurozone. Despite that most people even in Greece and Spain seem to want to stick with it.
As the Bank of England is independent then Scotland will be entitled to it’s population ratio share of it’s reserve funds maybe about 30 to 35 Billion. Whatever it is it would become the basis for setting up a Scottish reserve bank.
A proportionate share of foreign currency reserves is a reasonable expectation, but the Bank of England is not independent; it is wholly owned by the UK treasury.
That aside, if Scotland either uses sterling without ‘permission’ or pegs a Scottish currency to sterling, then yes, a share of existing UK currency reserves, added to currency acquired via export surpluses, would provide backing or enable the peg.
If Scotland has its own floating currency then those foreign currency reserves would not provide ‘backing’ since none would be necessary.
As David Halley said, modern fiat currencies are effectively shares, and active ones, in a country’s productive capacity. They are backed by the total economic output of the country, not foreign currency or gold reserves.
In that case the reserves would serve the same purpose they serve for the UK; as instruments of monetary and, where it exists, exchange rate policy.
Greetings from Raleigh, North Carolina.
Re the Plan B, maybe I’m missing something, but hasn’t Yes Scotland already pointed out several times that a commission of eminent economists has offered four options for Plan B? Is it feasible to point out to the No side that, once they are in a mood to negotiate in good faith, Scotland and rUK can discuss which one would be in the best interests of both parties?
It seems to me that Yes has not got that message out, but then I am probably missing out on some of the nuances from so far away.
@Skip_NC – Spot on with your analysis but it’s not that the message isn’t getting out it’s the mainstream media and in particular the BBC who keep pushing for ‘PlanB’ are trying to make it look like the Yes side has no answer and so put doubt in to the undecided voters
@Arbroath 1320
Oh well if the video games journalists says so then I guess that’s the final word?
I’m not sure which outcome of this referendum will give you people the ruder awakening.
@an_obersver
Our eyes are wide open to what happens if Scotland stays in the UK.
Still don’t like plan A. I don’t trust London with the economy, I think Westminster is wedded to debt and the National Debt will continue to rise, eventually somewhere down the line the UK will have another currency crash.
There may be a moral argument for accepting a portion of Westminster’s outrageous National Debt (though the refusal to consider sharing the pound by the No campaign has let us of the hook here) but it is very likely that the International financial institutions will consider an Independent Scotland rejection of the debt as a sound and prudent decision. Reject the pound sharing, reject the debt, why should we pay for years of mishandling the economy by London politicians.