Could fears over their future currency sway the Scottish people against independence?

The currency debate will matter when voters go to the ballot box because an independence referendum cannot just be about the heart, it must also be about the head. Leaving a union – be it the UK or the EU – might seem obvious to someone who is already convinced, but most voters will need reassurance that, if they jump, they will have somewhere safe to land. Alex Salmond made great play of his plan for an independent Scotland, boasting of the hundreds of pages it took up. But it has now fallen apart under the slightest scrutiny. Salmond seems to think it’s politically risky to argue for full independence, and is instead trying to build a halfway house based on a currency union. The fact that his fellow Yes campaigners have resorted to claiming George Osborne’s intervention is “bullying” shows quite how badly this has hurt the Yes campaign. They tried to build a concrete idea of independence, but now it looks as solid as a mirage. Mark Wallace is executive editor of ConservativeHome.
An independent Scotland may be better off outside a currency union with the rest of the UK, so the Scots shouldn’t worry much. Scottish banks could continue using the pound as a reserve on which they issue their own promissory notes, as happens already. Banks would have to hold higher reserves and could arrange private clearing-houses to provide liquidity to others in need. The only real difference would be that the Bank of England would not be there to bail out insolvent banks, which may mean that RBS would relocate to England. But the Latin American states which use the US dollar have highly stable banking systems precisely because their banks cannot expect help if they run into trouble. Neither should Scots fear life outside the EU – Iceland, Norway and Switzerland do well enough. The debate should hinge on a much bigger question: would Scotland be a statist throwback to the last century, or an open nation looking forward to this one? Sam Bowman is research director at the Adam Smith Institute.

Mark Wallace

Mark Wallace is executive editor of ConservativeHome.

Wednesday 04 February 2015
Mark Wallace is executive editor of ConservativeHome, says Yes
Wednesday 09 July 2014
Mark Wallace, executive editor of ConservativeHome, says Yes.
Wednesday 22 May 2013
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Thursday 18 April 2013
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Tuesday 14 August 2012
THE economy is in a mess. Business confidence is low, unemployment remains high and underemployment means that many who are officially in work are struggling to get by on a part-time wage. The entire country is engaged in a hunt for growth.
Tuesday 24 March 2015
Christian Schulz is senior economist at Berenberg, says Yes
Friday 06 February 2015
After the failure of the new Greek finance minister’s tour of Europe’s capitals this week to produce a workable debt deal, Greece’s situation now seems terminal.
Wednesday 05 November 2014
This weekend, people across Europe will commemorate the twenty-fifth anniversary of the fall of the Berlin Wall.
Wednesday 29 October 2014
Sam Bowman, research director at the Adam Smith Institute, says Yes. Many people, including me, expected QE to cause uncontrollable inflation and end in disaster. How wrong we were.
Wonga puppets
Tuesday 30 September 2014
John Lamidey, senior partner at Arminius Associates and former chief executive of the Consumer Finance Association, says Yes.
Alex Salmond
Wednesday 20 August 2014
When Scottish voters go to the polls in their independence referendum next month, they may ultimately make their decision on the basis of a single question: if we voted Yes, what currency would we use?
Thursday 14 August 2014
Sam Bowman, research director at the Adam Smith Institute, says Yes.
Wednesday 28 May 2014
WHEN the man behind the Segway, the battery-powered personal mobility scooter, died after riding one of his products off a cliff, it seemed like a grim end to yet another transport fad.
Tuesday 22 April 2014
WHISPER it, but things finally seem to be looking up. Investment is rising, unemployment is falling, and the deficit seems to be coming under control. But it could be a lot better. Real wages will not recover to their pre-crisis peak until 2020.
Tuesday 04 February 2014
RENTS are rising, pushing people on low incomes out of the neighbourhoods they’ve lived in for years. Resentment towards the rich is growing, with the most profitable and dynamic industries singled out for the most ire.
Wednesday 23 October 2013
THE PHRASE “papers, please” once conjured up the image of a totalitarian dystopia, where anyone might rat out their neighbour to the government. Britons have always been allergic to this informant culture – a hallmark of the unlimited state.
Thursday 20 June 2013
THE final report of Parliament’s commission into banking standards recommends many (often contradictory) things, but running through it is the theme that the industry suffered from a cultural failure.
Tuesday 16 April 2013
THE One Direction backlash has begun. Yesterday, critics reportedly dubbed the boy band’s £25m earnings last year “insensitive” and “grossly immoral”.
Thursday 02 August 2012
WHEN Napoleon Bonaparte’s regime executed an aristocrat on trumped-up charges of treason, stirring up bloody memories of the Revolution, his chief of police is said to have remarked that it was “worse than a crime; it was a blunder”.
Monday 19 September 2011
MORE people have climbed out of poverty in the past 50 years than did so in the 500 years before that. Life expectancies across the world have doubled in the last one hundred years.

City A.M.'s Opinion pages are a place for thought-provoking opinions and views. These are not necessarily shared by City A.M.

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