The lack of understanding of what the currency issue actually is, is shocking, even amongst Nats who presume to stand up and lecture the rest of us about it.
A currency is a means of evaluating and dividing up the total wealth of an economic area, and permitting trade within that area. One Pound Sterling has no intrinsic value. Its value is a reflection of the health of the economy within which it is the accepted currency.
A currency can only function properly if it is managed as part of the overall management of that economic area. That's why the US Dollar works and the Euro has been on the brink of collapse for the last 5 years. There is a single overarching financial authority in the US and there is a federal government which collects and redistributes the majority of tax income. That's the only reason Idaho can remain in currency union with California. The reverse - extremely limited central control and no means of wealth transfer via federal tax - is the reason Germany and Greece are straining at opposite ends of the Euro area.
Eventually, there will have to be a federal economic policy and fiscal transfers to keep the Euro working. Exactly the same level of integration would be required to keep a currency union between England and Scotland working. Of course, such a system already exists between England and Scotland; both Crowns and Parliaments were united, there is one government and wealth is transferred wherever it is needed.
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Quote:
Originally Posted by Damien
Scotland can keep the pound, pegged to our pound, but they can't force us into a Currency Union.
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Yup. Scottish banks holding an equal value of Pound Sterling in order to guarantee the value of Pound Scots, which just about works until you start to wonder where the money is going to come from to finance mortgages, business loans and the rest.
All the wealth creation will be in England. All the banks would be English banks with offices in Scotland, regulated by English law and operating according to the interests of head offices in London. No money markets or indigenous financial services institutions in Edinburgh whatsoever. What a glorious state of affairs to aspire to.