Scotland Currency Options: Is Plan B Returning to Bartering?
‘How many cans of strong larger can I get for an IPad with a cracked screen and a fluorescent Frisbee?’ asks Jimmy Mc Clean in a strongly worded letter to his local Scottish National Party office. ‘If I need a plumber to come and fix a leak, would 3 unopened bottles of wine, a foot rub, and a slightly soft turnip suffice as payment? These are the sort of questions we need Salmond to answer now that he has ruled out a Plan B on the currency. If we don’t get the Pound, the only option we will have left to us in Scotland is bartering’.
Such questions are coming in the aftermath of the televised debate between pro-independence Scotland’s First Minister Alex Salmond and the leader of the pro-Union Better Together campaign, Alistair Darling who successfully pressed Salmond on currency questions that he was unable to answer to the satisfaction of the audience. The debate left Scotland with the impression that if Plan A doesn’t happen – a currency union with the rest of the UK – Scotland will be left with no currency.
Getting the word on the street, we interview a clearly worried Scottish pensioner, Bernie Mc Taggart who states, ‘I don’t have much to offer, I live in a one-bedroom flat, nothing valuable there, I gave most good stuff away to my grandchildren. All I have to look forward to is Bingo on a Friday night, but without any currency or decent goods to barter for the entrance fee, how can I go? Also, what will the prizes be if there is no money? Probably homemade jam. My cupboards are already full of moldy raspberry jam that I won at the Women’s Institute tombola. I tried to barter that for 2 packets of Lambert and Butler cigarettes down the Spar, but the girl at the counter said I would have to throw in a kitten or 1-night babysitting service to sweeten the deal. It is so frustrating. Salmond has a lot to answer for.’
To seek some clarity on post independence scenarios regarding how exchanges of goods and services will work, we ask financial expert Professor Harvey Hanney, of the Institute of Financial Services of Ireland, ‘When Ireland became independent, how many eggs did it take to buy a pint of Guinness and a fish supper?’
Professor Harvey Hanney ‘Ha ha ha! We actually used the British Pound after independence, just like before independence, without a fiscal union, then later when the time was right set up our own currency. As with Scotland now, we had very little, if any influence on the British Pound before independence, so Scotland’s worst case scenario of keeping the Pound without a currency union wouldn’t be that much different to the situation now, no one would notice the difference.
After a transition period Scotland could pick the currency that suits its interests best. The Euro is not such a bad choice really for northern European countries, the southern European countries keep the Euro’s value artificially low, which would make Scotland’s exports more competitive, just like Germany’s are. Having its own currency, well that has worked well for the Swiss and the Swedish. Currency is really not a biggy, all independent countries go through this and it hasn’t been a problem for any wealthy small independent nation before. There are certainly some transaction costs, risks and opportunities with different options, but currency won’t be a major problem for Scotland.
Maybe the most important bartering question Alex Salmond should ask himself at this important time is… ‘ How many red herrings like this currency issue will it take to lose the referendum?’. My advice to Mr. Salmond would be to be open and clear and lay out the pluses and minuses of all currency options and let the canny Scots weigh things up. Otherwise this could be his Waterloo, or more appropriately, his Flodden.’
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