Anthony Hilton: Westminster cannot deny Scots their own pound
Saturday 15 February 2014
The strongest political message of the week was that the Scots would not be allowed to keep the pound if they voted for independence. George Osborne told them; Danny Alexander told them; Ed Balls told them. One each from Tory, Liberal Democrat and Labour.
But it is rubbish. When the Irish Free State was created just over 91 years ago, its currency was the Irish pound. It remained the currency until the country joined the euro in 1999.
There were no formal currency links between Britain and Ireland, but throughout the Irish pound traded at a slight discount to sterling and when the British devalued in 1949 and 1967, Dublin did too.
Also, when the British went decimal in 1971, the Irish did the same thing at the same time and with the same new coinage. There was nothing the British could do to stop them and none of this nonsense about the Irish having to constrain their banking and taxation system, because while the user thought the currency was more or less the same, it was separate politically and economically.
While Westminster can stop the Scots being part of the sterling currency area, which the Bank of England oversees, it certainly cannot stop them having a separate currency called the Scottish pound, which from the voters’ perspective would be identical to the Scottish pounds circulating today.
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