Currency Union

Bank of England Governor Mark Carney has made some pessimistic, if rather obvious statements about Scotland losing some of its sovereignty if it forms a currency union with Scotland. Whilst his statements come absolutely nowhere near the savaging that unionists fancy it to be, it does expose some of the problems facing a currency union with England.

For anyone interested, the full speech is available here.

As is my understanding of Scottish political history, Carney’s arguments will have more of an affect on people from the English political landscape than the Scottish political landscape. Apparently, England is and has been, generally, bigger on notions of government and state sovereignty than Scotland. And, in all honest, this is probably closer to the current political reality than the idea of absolute state power.

If Scotland became independent, and stayed in the EU, it would still be subject to the European parliament. Of course, with the EU recovering in strength, joining the euro might be on the cards by 2016, assuming any problems along the way are avoided.

Perhaps the reason that the Yes campaign is so set on a currency union with the rest of the UK, despite its flaws, is political. Currency is more than just a unit of trade, it’s a powerful symbol of national identity. After, what did UKIP choose as its symbol to represent the UK in contrast to Europe? Keeping the pound is the safe choice, the less threatening choice. It would work best as a stepping stone between the years immediately after independence and either setting up a separate currency or joining the EU.

In all honesty, I expect that the transition from constituent to nation will be rocky, to a greater or lesser degree. And it’s not like the Scottish government would adopt radically new policies overnight. There will be a few years when the policies and governance of the two countries will have more similarities than differences. A currency union will help protect the fledgling Scotland from any potential turbulence in its infancy. Of course, that is assuming the parent bird is ready to help it fly.


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