Currency is an emotional question rather than a rational one.
Scotland has always had a pound of it's own, it's major Banks have had the right to print currency on a basis that they held Sterling deposits to the same value. Scotland's independence does not mean that principle needs to be broken. Many countries have operated on a basis of a fixed rate of exchange to another country, however given the large scale interdependence between Scotland and the UK, and the intransigence of the Powers at Westminster it might well be that Scotland should adopt a dual currency formula with the Scottish Pound having a fixed parity to the British Pound, that citizens be given the right to have bank accounts in either the Scottish Pound or British Pound.
Under these circumstances Scotland might be faced with a challenging Banking regime, but one that is not beyond management. This would allow for the development of a Scottish Central Bank which, providing it applied the rules of keeping the banking sector to maintaining a level of Sterling deposits in line with money being created, would be able to defend any run on banks (act as lender of last resort).
An independent Scotland would appear to potentially have an international trade surplus of around £9 billion (depending on how the oil revenues get divided during negotiations. However as some 20% of the Scottish corporate sector have headquaters in the rest of the UK about £5 billion of the GVA being generated will migrate back to the UK giving Scotland a surplus of around 4 billion.
Questions that cannot be resolved yet, relate to the extent of Scottish residents investments in UK based companies as these will generate a dividend flow back into Scotland. This would imply that it is safer to assume for the moment that dividend flows out of Scotland based companies would equal thos flowing in the opposite direction from UK based companies, even though statistics seem to indicate a greater propensity for saving amongst the Scottish population.
With Scottish GVA (excluding oil) running at around £120 billion it indicates that Scotland would have effective “new money” equal to about 3.5% of GVA which gives a new Central Bank a good position from which to develop a strong banking sector. Growth of money supply at 3.5%, under ordinary circumstances, should be sufficient to fund real growth in the economy (assuming population growth of 1.5%) without having to resort to policies that create inflationary bubbles.
Should the SNP projections on the future of offshore oil prove true, there would be a need to plough greater amounts into a sovereign fund to prevent the excessive money supply from creating inflation in the local economy!
Because of the inter-dependence it would seem silly for either side to shoot itself in the foot by taking a uncompromising stand. In the event of a yes vote would Alex Salmond be so obtuse (contrary to his pragmatism in running a the Scottish Government) as to not put before the people a proposal coming out of the negotiations that has the potential of satisfying all parties?
I would look on the referendum not as an end point, simply the starting point of proper negotiation between the Scottish Government and the UK Government. The result of the referendum is therefor a question of just how strong one wants to make the negotiating arm of Scotland. In probability changing the Union into a federation, with full fiscal control, has the potential to satisfy both sides.
From Alistair Darling for the better together side I would like to know the following:
What guarantees can the UK government give on not reneging on it's promises of the "better together" campign for greater devolution. Reneging on contractual pension liabilities to your own civil service seemed hardly to require a debate.
When will the UK Government start repaying it's debt and how. That debt level currently places all of us at risk of much, much, much higher taxation … will Scotland be exempted from future taxation increases or new stealth taxes.
In what way will the UK assure it's existing as well as future pension liabilities. Scotland is proposing to use part of it's future oil revenues to do this and though it may or may not achieve all, it is a start point, for accounting future liabilities.
Your “better together” coalition have made a whole lot of promises on what you would give to Scotland in the event of a no vote. Why has none of this been on the table before it became apparent that the Yes campaign was within striking range of winning
Possibly the most important question …
Can you deliver?
Is the UK a democracy or simply a stitch up between a cosy club of Tories and Neo Tories, running the country for the benefit of the few …
Here is what the British people have to say!
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