Monday, July 27, 2015

Is currency really such a huge dilemma?

As a result of my previous post arguing that there is a respectable case for a relatively early second independence referendum, a number of people left comments suggesting that we can't even think about doing that until we get the currency issue sorted.  The reality is, though, that the complexity of the issue is reduced by the fact that there are only so many options open to us, and some of them can be swiftly eliminated for political reasons.

Option 1 : Apply to join the Euro.  Might have been a vote-winner fifteen years ago, but now a complete non-starter.

Option 2 : Propose a common Sterling-zone with the rest of the UK, and decline to specify a Plan B if London refuses to agree to the plan.  There is broad consensus that this policy was one of the weakest points of the Yes campaign last year (from a tactical rather than economic point of view), so a repeat can probably be ruled out.

Option 3 : Propose a common Sterling-zone, but have a clear Plan B to cover the theoretical possibility of a London veto.  This falls foul of the very reason we were so reluctant to specify a Plan B last year - arguing the case for two completely different policies might not come across as terribly credible, and can be easily misinterpreted as meaning that we don't really believe Plan A will happen.

Option 4 : Use the pound outside a formal Sterling-zone.  A perfectly respectable possibility in theory, but in practice leaves us open to more sneering about "Panama".

Option 5 : A Scottish currency pegged to the pound.

Option 6 : A Scottish currency not pegged to the pound.

As far as I can see, it's overwhelmingly likely to be either option 5 or 6, so it's just a question of war-gaming the two possibilities to see what would be most likely to stand up to intense scrutiny during the campaign.  It might seem regrettable that the decision can't be made on economic grounds alone, but the reality is that the choice of currency has to command public consent, both before and after a referendum.

67 comments:

  1. A huge dilemma? Not less than a year after the first indyref it's not. (fairly obviously)

    Meanwhile the riotously funny YouGov polliing on why little Ed lost the election is here for those who want a good laugh. :-D

    http://www2.politicalbetting.com/wp-content/uploads/2015/07/pic3.png

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  2. Couldn't the policy position be a Scottish currency (say option 5 or 6 above) unless the rUK government had a workable proposal for a Sterling currency union?

    This would show that supporters of independence are open to proper negotiations if there is a willing partner and a mutual benefit. The significant thing is the pro independence lobby are setting the debate this time, rather than being an [alleged] unwanted partner.

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    1. "Couldn't the policy position be a Scottish currency (say option 5 or 6 above) unless the rUK government had a workable proposal for a Sterling currency union?"

      Basically this strategy acknowledges that CU is a desirable option, which will then be rejected during the campaign by rUK. This will then Yes to go for option 5 which they will by implication have already accepted is the less desirable option.

      No easy way out on the currency question.

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    2. No. The desired option is a Scottish currency unless the rUK government can convince otherwise.

      If rUK government not interested, despite pressure from its own business groups, then so be it.

      The White Paper,if you accept the concept of a currency union, had it round the wrong way.

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    3. What should be considered is a specific plan to move from one option to another over time. The idea of a currency union was presented as being the long-term solution for an independent Scotland, when it would only really be necessary as a transitional measure. It would be easier for both Scotland and the rUK for the currency situation to start out as a currency union using GBP, then moving to a separate Scottish Pound (i.e. legally separate, with a separate currency code etc) guaranteed at a 1:1 peg with GBP by the Bank of England, then moving to a peg held by whatever Scottish currency body might exist. Presenting this as the ideal option would mean the Yes campaign would have a 'reasonable' currency option that would be difficult to argue against on the basis of rUK national interest. Effectively, the move to a separate Scottish Pound would be as controlled as the move to the Euro, albeit in reverse.

      Theoretically, that arrangement of slowly reducing the connections could apply to many other areas of governance and finance as well. The consequence would be that it wouldn't be possible for an independent Scotland to be able to change things radically overnight, but it would help to calm people down and make them confident that they wouldn't be plunged into poverty overnight, as was the fear instilled in many pensioners and others by the No campaign. At its peak, the arrangement could even mean that there would still be some fiscal transfers in return for the continued use of HMNB Clyde. Regardless of whatever else happens though, the final say over the arrangements would lie with the Scottish Parliament rather than with Westminster, so it would still be a considerable improvement over the current situation.

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    4. I understand this line of thought. It is perfectly reasonable and controlled.

      However, it suffers from the flaw that the rUK government will simply rubbish it. They will not agree to a short term currency union arguing they gain little advantage to it relative to the risks.

      Whatever the proposal is next time around it must not rely on the rUK government agreeing to it. We cannot hand all the power of acceptance to a body that is fundamentally opposed to independence.

      Of course they will point to the weaknesses in *any* currency proposal, but this is different to saying they will (and by implication the BoE) simply not cooperate with it.

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    5. "No. The desired option is a Scottish currency unless the rUK government can convince otherwise."

      So a CU is not desirable and shouldn't be mentioned.

      (unfortunately, Yes's panel of (some Nobel prize winning) economists had CU as the best option back in indyref 1 - get ready for No to ask what's changed.

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    6. To which the obvious response is "the No campaign told us that a currency union would be vetoed by London and would be a disaster anyway, so why are you asking that question?"

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    7. "So a CU is not desirable and shouldn't be mentioned."

      I'm not saying that. You are.

      The No campaign will disagree with 100% of what is proposed. That seems obvious to me.

      All I am saying is do not make a proposal that requires implicit rUK government support to succeed. If a currency union can [or people want it to] be agreed let it be from rUK industry/consumer bodies forcing the issue and not the Scottish government preaching to everyone it is the best option.

      The currency union was ultimately proposed from a position of weakness. It was well argued and intended but naive. That does not necessarily mean you abandon it as a concept.

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    8. To which the obvious response is "the No campaign told us that a currency union would be vetoed by London and would be a disaster anyway, so why are you asking that question?"

      My wording of a preferred Scottish currency unless the rUK government can propose a workable solution for a currency union takes the currency issue beyond the "No" campaign.

      "Workable" includes both sides ceding sovereignty as highlighted by the BoE Governor. This would have to be agreed *after* a referendum.

      However, as I say, the referendum proposal is a Scottish currency.

      I make my point from a basis of a currency union being the best way forward for the British Isles. It makes sense to me. However, I do accept that a Scottish currency and Central Bank is a powerful objective and worth building.

      Either way, I obviously support Scottish independence and would argue in support of the Scottish government's proposal.

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  3. Number 6 for me.

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  4. There's also 7: a Scottish currency pegged to the £ plus a range of other currencies like the dollar besides the £.

    That's what Norway has.

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    1. Could we have a Scottish currency pegged to the Euro ?

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    2. Don't know. But I think the euro is one of the currencies (besides the dollar and the £) that the Norwegian kroner is pegged to. So I suppose so, but don't put all the eggs on one basket.

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    3. How can you maintain a fixed exchange rate with a number of different currencies that float in value against each other?

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    4. I could envisage a moving peg to a currency that takes into account the values of other currencies when deciding to re-value, but I don't see that that could be described as 'pegging to multiple currencies'.

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  5. All options would be attacked in much the same manner the currency union was. Doesn't matter if an option makes sense fiscally since that is hardly the reason the unionists and their tame media are attacking it in the first place. They will again line up their tame bankers and BBC pundits to pour scorn on anything that isn't the current situation regardless. So it's really a question of which option the Scottish public finds most persuasive and is most robust to the inevitable attacks.

    Fact is we won't win Indyref2 on currency alone and the unionists sure as hell didn't run on it at the last panic gasp. They ran on more powers and the vow and they did so because that was most persuasive to those swithering.

    Well they won't have that option for Indyref2 and for all the constant banging on about currency from the nasty party during the first Indyref the polls just kept right on tightening while the tories and their hangers on kept right on screaming about it.

    If Nicola and the team keep doing the right things for Scotland, keeping in touch with the Scottish public (while pushing for more powers) then the utterly vital trust factor will keep going our way. Every aspect of Independence (including currency) is seen by the Scottish public through the lens of who they trust the most and least.

    Westminster and and the establishment party leaders or the Scottish parliament and Nicola.

    We keep up what we are doing and winning over the Scottish public then currency just becomes a dry question of implementation in the minds of scots and not the festival of economic scaremongering and hysteria promoted by the unionist media.

    One thing we can and will avoid is rushing to a second indyref regardless of international turmoil which will obviously help the scaremongerers.


    Incidently, those worried about a Corbyn led Labour party hurting the SNP should perhaps reflect on just how far the PLP and top of the Labour party will go to stop him.

    "HuffPost UK ‏@HuffPostUK · 3 hours ago
    Labour leadership rules should be reviewed amid 'infiltration' claims, says Andy Burnham http://huff.to/1VJ46Jz


    You think the Blairites and Brownites were bad? Well just wait till both of those factions unite their forces to delegitimise and undermine Corbyn from day 1. (should he win) It will be absolute CHOAS! The PLP has no intention of going into the next election under a Corbyn leadership and they care not a jot what upstart members think.

    We might even see a return of the Eggman as he and wee Dougie were past masters at undermining leaders. LOL

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  6. As long as we have our own currency. I know the currency union was the most conservative/pragmatic choice last year, but the Yes campaign never dealt with the issue, and it just went on and on. We surrendered the initiative and when Osborne rejected it the die was cast. We also restricted our degree of independence and room for manoeuvre. We need to have our Central bank as part of the monetary policy for independence as well.

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  7. Scots mortgages are also denominated in Sterling - so depending on the freely floating value of a putative independent Scottish currency - you would also face considerable conversion charges as it would be unlikely (given our economic base, current financial state and oil etc) there would be 1 to 1 parity with Sterling.

    I would wish you all the luck in the world at trying to sell that - but even if i did- I fear the task impossible in any event.

    Pegging the currency is also a non starter as the economic base in rUK would be an order of magnitude greater than an indy Scotland - Scotland would come under speculative attack if it tried to maintain parity - forcing our state to burn though any reserves (what, where?) to protect our currency's value. Think Major and ERM.

    Personally think the SNP absolutely barking to go for another ref in less than 10 years - but be my guest.

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    1. Sorry but I dont understand what you mean when you wrote
      "you would also face considerable conversion charges as it would be unlikely....there would be 1 to 1 parity with Sterling."
      The conversion charges will be a set %, i.e. 0.5% regardless if the ratio is 1:1 or 1:10. The conversion charges for moving into Euro or dollars dont change everytime the exchange rate changes.

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    2. So you consider a sizeable majority scots to be barking since they are the ones who polling tells us think Indyref2 in the next 10 years is inevitable?

      A real surprise we wiped the floor with the out of touch BritNat parties in May, isn't it? :-)

      Speaking of John Major.. I'm certainly looking forward to the impossible task of Cameron persuading half of his own party they are barking mad (or indeed just swivel-eyed loons) for opposing his pro-Europe IN stance for the tory party.

      I would wish you all the luck in the world trying to sell that to eurosceptics somewhat displeased at having to pick up the tab for the Greece bailout, (due to Cammie's unsurpassed negotiating 'skill') but I shall be too busy campaigning for Holyrood and indeed laughing at yet another tory shambles and split over Europe.

      Not that the curent Labour shambles and split isn't entertaining of course. (I'm sensing a pattern here. ;-) )

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    3. Well ScotBrit2014, loads of people used to say that there would never be a Scottish Parliament, or that the SNP would never get into office, and people used to say that there would never be a referendum on Scottish independence. When it was a reality we were told that the Yes vote would never get over 30 per cent, because the very idea of Scotland running its own affairs was batshit crazy to these types of people. Then Yes got 45 per cent of the vote, and over 1.5 million voted Yes. With a track record of that...

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  8. During the referendum I spoke to a woman from Maryhill who was on the fence. When I raised the subject of currency she replied "It doesny bother me son coz I don't have any anyway. It means nothin tae me".

    I don't believe currency is an issue. It's just a diversion tactic used by the unionists to preoccupy the nationalists.

    Scotland will be Independent within my generation. Every single day a scared pensioner dies and is replaced by the confidence of youth.

    It's inevitable so lets just sit back and watch it unfold :)

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    1. I really think you're barking up the wrong tree there. We all get older, we all become pensioners if we live long enough, and we all develop fears and uncertainties we didn't have when we were younger. A majority for independence isn't going to magically appear.

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    2. I'll respectfully beg to differ. This one isn't about to "develop" any fears of independence any time soon and neither will any of my kids. It will take something cataclysmic for me to turn. And I mean abso-fucking-lutely cataclysmic of unmeasurable proportions!

      It's coming. Patience and a convenient trigger for another referendum and we're done.

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    3. I have passed my three score years and ten, my brother-in-law and his wife are ten years older, and we are all voted yes. So don't assume that the older generation are unionists - too many of us remember when the dead were counted as voting NO.

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    4. Yup...what Rab said in his first post. Actually been thinking all of those things in the last few days.

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  9. Glasgow Working ClassJuly 27, 2015 at 8:40 PM

    You Nat sis are becoming a yawn. How many referendums do you want? Is it a case of keep trying until your bore the shit out of everyone and we say enough and vote yes. Then when you fuck up the economy do we get another vote.

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    1. He's funny because he pretends to be stupid!

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    2. Why dignify this cretin with a response???

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  10. 5 or 6. Always should have been.

    Hope turned to utter despair for me watching Yes desparately try to flog the dead Sterling zone horse. Decades of work towards this moment and, as has been said, we simply hand a loaded gun to our opponents.

    "I would wish you all the luck in the world at trying to sell that - but even if i did- I fear the task impossible in any event."

    Look, we're not suggesting walking on water here, its all been done before. If solid examples are required to activate your imagination, start with Slovakia in '93, then google away. Open your eyes.

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  11. It's not a question of just sitting back as the local branches near me are pushing hard on a far more focused and active youth policy and engagement. From what i hear we are hardly alone either.

    Mhairi Black is as inspiring a youth ambassador as Nicola is so we need not fear any lack of role models or indeed the time and effort to politically engage scotland's youth. lIt's the westmisnter establishment parties who have shamefully neglected to do that, not us.

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  12. sincerely hope that it is 5. or 6 and that they get all the work done for it with a recognisable central bank in place well before the next referendum.

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  13. lets be honest - if the UK wants to give up any idea of a formal currency union, then sterlingisation - a Scottish currency pegged to the value of sterling was always going to be plan B in the short to medium term and then launch our own currency...much like Ireland did. What is always illuminating for me is the idea of the UK doing all in its power to destroy Scotland's economy out of a sense of spite and pique. Its almost arguing for the union to be maintained simply to keep the rUK honest. I guess that's as good as it gets for the elusive "positive" case for Union.

    The UK either gives Scotland control over its finances or it faces this argument again and again for the foreseeable - with it the risk of it crashing down due to irreconcilable differences between the two nations.

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  14. A Merk, worth 6.66GBP at launch, initially pegged to NOK, has much to recommend it.

    ...not least the size of penny chew it allows for!

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  15. James makes a pretty solid assessment here.

    One of the weakest parts of the campaign for me was currency. I appreciated they didn't want to scare ordinary voters, but it was wasn't a strong economic argument and seemed to smack of this idea that everything would be better but nothing important would actually change.

    Without going into a huge dry technical screed and putting everyone to sleep, the inability to control the devaluation levers is fairly crippling unless you have a massive disparity in relative capital bases (i.e. Panama/USA). The UK and Scotland are too close in size, so I would strongly advise against Sterlingisation, even if it was the easiest short term solution.

    Option 5(ish) moving to 6 is the most rational approach. It would scare some people, but you need to be able to print your own money. Interest rate control is a red herring, although you don't want to find your rates being set by a country that may not be in sync with your own (cf Northern and Southern Europe just now).

    I'd have gone for a semi-fixed float inside a set range against Sterling. The danger is an external currency attack of the kind we saw back in the days of the ERM crisis, but Scotland's underlying capital base is robust enough to hold it in a reasonable band. Scotland would start with something like an A- to A+ credit rating, so unless we did something particularly stupid a pegged band should hold stable for 2-3 years.

    Once you have more track record you can loosen the band and move to a free float. You could peg it to anything (Euro, Dollar etc), but realistically there's not much reason to avoid Sterling. It's a world reserve currency and the rUK economic cycle is the closest match.

    Anything else is potentially bad for a budding independent Scotland. Would you want to be in a currency union where the issuing bank is trying to stop an overheating housing market in the South, while yours is not? How would you gain more currency reserves when you cannot print cash?

    It was overlooked a fair bit in the referendum debate, but even little Panama struggles with Dollarisation. They frequently run out of cash because they can't print currency, so they have to use internal reserves to buy Dollars, and they have occasional domestic crises where the supply of Dollars simply dries up. Less of an issue in a modern digital economy like ours though.

    I hope any second independence campaign goes for something akin to option 5, it would certainly remove one of the big reasons they didn't get my vote last time round. Although given I've been in the international finance biz for several decades I'm probably not the average voter on this issue.

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  16. Glasgow Working ClassJuly 27, 2015 at 10:19 PM

    If the Nat sis leave the pound which they must want to do otherwise the hated England will still run the economy then their only alternatives are negotiating their way into the EU and accepting the euro and being dictated to by the EU. Or maybe floating a new Scottish currency on the markets and of course having a new stock exchange. The Nat sis will lose another referendum unless they can convince the Scottish people they can have a sound currency and economy. The reason they lost previously is they kept changing their minds on all the important issues.

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    1. Seriously, James, can you not just delete this offensive guff, why should these people be given a platform to refer to the SNP as Nazis or "Nat sis." I'm a fan of this site but this garbage is really putting me off visiting here (which is probably what they are hoping for).

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    2. Pantone. whoever Glasgow Working Class is, he/she is just making their cause look batshit crazy. I would just ignore him\her and take pride in the fact you are not on their side. If the individual cannot see how doltish they are making themselves out to be, then that is his/her problem not ours. I think it might be that dipstick Aldo again...

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    3. Ohhh, Nat-sis. Now I get it, I thought it was some weird Isis comparison.

      Thanks Pantone, that makes much more sense.

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    4. Glasgow Working ClassJuly 28, 2015 at 12:11 AM

      Pantone 300. You expose your weakness and predudice against the English by your comment. Your inability to engage with someone you disagree with gives me credible reason to say Nat sis.

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    5. He's funny because he pretend s to be stupid!

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    6. Can "Glasgow Working Class" please give one single example of why my comment above shows any kind of "prejudice against the English"?

      The only way that you could ever interpret an objection to "SNP are Nazis" as being anti-English is if you knew that the person who made the comment is English.

      You are giving yourself away GWC. Just like last week when you were making comments like "Och ye the noo" and kilts on fire? Scots would never say such cliched things, Glasgow Working Class my bahookie, Kent UKIPper more like.

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    7. Glasgow Working ClassJuly 28, 2015 at 12:46 AM

      I try to be stupid but the Nat sis make me sensible and that is not my intention. I like to be working class. Unfortunately the Scottish Nat sis have no idea about the former class struggles and just take their salaries pretending they are against austerity. Disgusting bunch of hypocrites.

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    8. Glasgow Working ClassJuly 28, 2015 at 12:59 AM

      Pantone 3 hunner. Because you want to depart from the Union. Scotland is a Nation in a Union but you Nat sis are not happy with this Union and seem to prefer the EU that will dictate how you wipe your arse and currency!

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    9. Nope, weak argument, Kent UKIPper, still doesn't explain why it's anti-English to object to the SNP being called Nazis.

      You're spot on Muttley. Batshit crazy, lol. Maybe we do want them on here being bigoted brit nat nutters :D

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    10. See what you did there Pantone...? You wound it up and it buzzed into some kind of twilight zone it knows as life. Don't do it.

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  17. Mark Carney said the SNP proposal to retain sterling in a currency union would have worked and would be the best short term solution because the economies of England and Scotland were so integrated already. You only get problems in a currency union where there are large disparities. The SNP took advice from Stiglitz on this.

    The problem wasn't the economics of the proposal but the politics of it. It would have required co-operation to work, and Osbourne made it totally clear that he would not be co-operating.

    Economists are not politicians. The political mind isn't interested in what works rationally but in what power it can wield to subdue others to its will. Politicians can be utterly perverse and that wasn't something that Stiglitz reckoned on.

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    1. Glasgow Working ClassJuly 28, 2015 at 12:00 AM

      But why would a RUk facilitate Scotland on a short term basis. They would do their own thing and leave the Nat sis to their own ends. Get real Nat sis and live in the real world of finance.
      If you want independence then do not beg others to help. Take the leap or retreat and shut up moaning about being hard done tae.

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    2. You really do need to be killed.

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  18. Independence has to mean Independence. That means having our own currency. So it has to be options 5 or 6. Its a no brainer. I have no fears about Scotland being able to support its own currency. The Brit Nats don't want to play so sod them.

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    1. Glasgow Working ClassJuly 28, 2015 at 12:31 AM

      You are wrong if Scotland wants its own currency then go for it. The Brit Nats ca not stop it if Scotland votes for independence. Your squirming to stay in the GBP after saying you wanted the German euro gave you no credibility just like you hated NATO and then wanted to stay in NATO. You need to get a grip and be consistent. Fuck me I am a Unionjst and trying to give you Nat sis some Scottish credibility. Help ma Boab.

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    2. You are BS full of, you clearly didn't read the post at all.

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  19. In reality the whole currency nonsense was just a device to show how much contempt the our english colonial rulers have for Scotland.

    307 years of the greatest union in history but we own nothing. Everything belongs to them and not us. Our share of the the BoE, the Mod, consulates, embassies, palaces, museums. We paid for it but we are entitled to nothing.

    It should be hammered through the no voters thick skulls just how much their overlords hate, loathe and despise them.

    The correct answer is we will be using the pound. Either sharing the debt and in a currency union or debt free and able to take our time in creating our own currency.

    The fact the the quislings have to keep regurgitating a such a trivial waste of time shows the futility of their case.

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  20. @ James for option 6 do you mean pegged to something other than the £ or not pegged to any other currency? Either way I'd opt for 5 moving to 6 or straight to 6 ahead of the other options. I think I was not terribly fussed by the currency issue on a personal level because I've lived and worked abroad (often in border regions) and consequently received wages and made payments Sterling, Euros, U.S. Dollars, Canadian Dollars, Icelandic Krone. However close friends and relatives were worried by this issue or at least the apparent inability to articulate "What happens if Osbourne et al really do behave as bone-headedly as they claim they will?". As I've said on here before politically speaking almost any definitive answer would have been better than the cognitive dissonance of leaving the political union but maintaining the currency union. I also feel that the keeping the pound angle prevented any significant campaigning on the potential dangers of staying in the union e.g. Gross Incompetence of UK management of Scottish Economy, Holyrood budget cuts, threats to human rights legislation, brevity, Trident renewal, Tory majority govt (given his personal ratings Milliband was never ever going to win with or without our help). Maybe I'm an old curmudgeon but I do think we needed more on reasons to leave the UK as well as the good work on why we should go to Independence. I've previously described myself on here as a Scottish nationalist and a European unionist, in principal that is still true but only if there is some realistic chance of the EU Parliament actually running the EU lacking that my EUref vote will be cast on a tactical basis even though I doubt that Brexit is a realistic prospect.

    Well that was longer than expected but a Tory driving a Land Rover did nearly kill me today - and I wasn't even dressed like a fox.

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    1. Brevity above should be Brexit - bloody autocorrect is probably working for MI5 ��

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    2. Glasgow Working ClassJuly 28, 2015 at 1:15 AM

      Andrew on reading your comment you should maybe go into social work or something usefull and leave politics and the defense of our Nation (Britain) to those wise in what is happening in world events. Maybe you should join the Church.

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    3. What I don't get a Nat Sis or anything; poor effort GWC.

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  21. Has to be 6 eventually, by way of a shared pound as an exit strategy. The Euro discussion comes after that but I don't think it's a goer.

    Derek.

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  22. The issue of currency cannot be discussed without debt. The cause of the Eurozone issues is that of not sharing a common debt.
    The UK has north of GBP 1 trillion in debt and many more trillion in unfunded liabilities (pensions, etc). What is the plan for this debt?
    A currency is the productive worth of a nation, it cannot be manipulated forever and should be free floating. This is how countries like Greece survived pre Euro and struggle now, as their debilitating debts would have depreciated with their currency, not appreciated by being part of the German currency.
    It was always clear that a separate currency is required, which may float within a band against Sterling for as long as is prudent (5 then 6), and that Scotland will in essence be a dual currency nation with most people having and using GBP and Scottish Pound.
    Modern technology can ensure that individuals can switch currency at very cheap rates to support this.
    With regards to the debt. I believe that we can reverse some austerity and run deficits by printing up to 2-3% of GDP in currency and not issuing debt. This should not really affect the exchange rate and anyway we are an oil producer, so we should always have demand for our currency.
    For the existing debt, it is hard to see beyond default and move on. The capital markets should not punish Scotland as much as politicians say. We are an oil rich country, and have significant asset and capital flows which are easy to securitise.
    Unfunded liablilities are a bigger mess for another day, although NHS pensions are already devolved to scotland? Along with local government,etc.

    I am glad we are back to discussing independence.

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  23. Currency wasnt the issue people think it was to win that argument all we have to say is we will use the pound. As the Edinburgh university study proved currency was no more influential than the vow.

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  24. Not intrinsically but doubt / lack of confidence created in one area has a tendency to spread to other areas. Arguing that we will do something as long as someone else agrees to let us do it (currency union not sterlingisation) was in practice very easily countered by the unionists as should have been expected. Creating doubt there made it much easier to create doubt in other issues. Bottom line is that those of us favouring independence needed to be able to say "it will be like this" with no strings attached. Claiming (probably correctly) that osbourne et al were bluffing wasn't good enough and sterlingisation was a novel and therefore uncomfortable idea for many with no experience of currency issues beyond holiday money.

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  25. Just an idea to throw in the mix, others would have to argue the pros and cons.

    Every country in the world now has not one but two currencies. Their own national currency, wether that be the pound, the dollar, or even a shared currency like the euro. But their is now another currency which has no borders - the bitcoin. I would not advocate we all try and start using that, but what about a merkcoin for example, which would only be usable in Scotland?

    Stupid? Or could something along those lines have a chance of working and starting to break the stranglehold of sterling/BoE?

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  27. Yes, currency is a huge dilemma.

    Most people owe debts. Whether it's a car loan, a mortgage, a business loan, bank loan or overdraft, it was incurred in Pounds Sterling.

    There is no guarantee that the Scottish currency post independence would be able to keep up with Sterling in terms of value - nor is there any guarantee that that the earnings-outgoings Ratio would remain the same. For example, if a Scot Dollar is worth one fifth of the Pound Sterling, then, if you earned 20,000 pounds a year before the dissolution of the union, provided you now get paid 100,000 Scot Dollars, then debt should be no problem. But there is no guarantee of this at all. You might get paid 80,000 Scot Dollars but the value of Sterling remains the same. But you still owe your debts in Sterling. What happens then? Mass bankruptcy and default? Or would the Scottish government bail people out meaning more sovereign debt and higher taxes?

    Of course currency matters. It is absolutely crucial. If you think it's not important then I dare you to take that message to the doorsteps.

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