If the Scots vote for independence this September, the country could be a testing ground for currency competition, according to the Reserve Bank of Australia's assistant governor, Guy Debelle.
But Debelle cautioned today that private issuance of competing currencies in Scotland has been tried before, and while it worked well for a spell, was inevitably not stable enough to survive.
Speaking via a robot (which Debelle had some difficulty operating) at Camp Alphaville, an event organised by the Financial Times, he said that the possible separation of Scotland could "go back to experiment with a multitude of currencies, like Bitcoin. We can see how it goes."
David Birch, director of Consult Hyperion, who followed Debelle on stage, disagreed with the Australian's diagnosis of the Scottish free banking experience. Scottish free banking didn't collapse because of economic reasons, said Birch, but because of an "outrageous" political intrusion in the 19th century.
Birch highlighted that crises were fewer under the private Scottish system of creating money, than under state-run alternatives. Debelle concluded by saying that we can "all go back to the Scots in a few years and see how it went".