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Currency, Confusion & Credibility

The choice of which currency to use is perhaps the single most important economic decision a country can take.

In recent days, there has been growing confusion over which currency a separate Scotland would use.

The UK pound is one of the oldest, strongest and most successful currencies in the world – we want to keep it that way.

However, the nationalists’ plans for independence put that at risk.

The nationalists’ credibility on currency took a further knock today as Chair of the anti-UK Yes Scotland campaign, Dennis Canavan, backed the creation of a separate Scottish currency if Scotland votes for independent.

Canavan’s comments come as fellow Yes Scotland board member Pat Kane also challenged the SNP currency position.No fewer than five members of the Yes Scotland board have now distanced themselves from the SNP policy saying that keeping the pound was at best a short-term option and favour setting up a new Scottish currency.

Former UK Chancellor and leader of the Better Together campaign Alistair Darling has said that the nationalists’ credibility on the currency has evaporated.

Speaking today, Alistair Darling said:

“How on earth can they ask people to vote for independence when they can’t even agree amongst themselves the most basic and fundamental things like what currency we would use? As their confusion over currency has escalated their credibility has evaporated.”

The comments from the Chair of the anti-UK campaign come just a day as other senior nationalists broke ranks to oppose the SNP’s currency plans.

Yes Scotland board member Colin Fox earlier this week called for an independent Scotland to abandon the pound and create a new Scottish currency.

Former Deputy Leader of the SNP, Jim Fairlie, has also criticised the SNP’s currency policy saying that “the most sensible currency option for an independent Scotland would be a Scottish currency.”

With five Yes Scotland board members arguing for a separate Scottish currency, how can the nationalists credibly claim their policy is to keep the pound?

With every passing day, it is becoming increasingly clear that the only way to guarantee that Scotland keeps the strength of the UK pound is to vote to stay part of the United Kingdom.

Key quotes from Yes Scotland board members

Dennis Canavan, Yes Scotland chairman, said

“My preferred option is for Scotland to have its own currency because I think that would give us more flexibility, more freedom. It would give us a wider range of economic levers” (BBC News, 30 April 2013)

Pat Kane, Yes Scotland board member, said

“Sterling Zone might be solid first step for independence but it is in no way final.” (Twitter, 30 April 2013)

Colin Fox, Yes Scotland board member, said:

“It goes without saying that keeping the Pound or establishing a 'Sterling Zone' means handing over a considerable amount of power and control over Scotland's economy and spending options to the Bank of England and the City of London. And many will inevitably ask what then is the point of Independence?”

“So, on balance, after weighing up all the issues involved and recognising that many other small Independent countries such as Norway, Switzerland and Iceland prefer to use their own currency - because it gives them more control of economic and financial decisions – this option seems to make most sense.”

“And I notice the ‘Greens’ agree. The SSP’s other partners in the 'Yes Scotland' coalition however, the SNP, currently prefer the 'Sterling Zone' option. They have it’s fair to say changed their mind on this issue often but their latest view seems to me entirely in keeping with their softly, softly, and dare I say conservative approach to selling Independence as a whole to those they believe are frightened by the concept of change. The SNP argue, as I understand it, that the transition to Independence should involve as little disruption as possible to people's day to day experience. I suspect they may well advocate a new Scottish currency being established in Scotland in due course.”
(Blog post, 28 April 2013)

Patrick Harvie, Yes Scotland board member, has repeatedly argued for a separate Scottish currency:

“We need to keep the Scottish currency option open, and the government should be prepared to do the groundwork to ensure that we don’t leave ourselves forced to accept unreasonable terms in relation to Sterling. Scottish Greens have said an independent currency should be an eventual goal, even if we maintain a Sterling union as an interim stage.” (Scottish Green Party Press Release, 21 February 2013)

“Some other countries Ireland, for example, did continue to use the pound and then gradually separated, it wasn’t a one-off moment of change, it was a gradual separation towards monetary independence. It might take a generation, it might take longer than that but I think we would be on a trajectory towards a more independent currency.” (Scots Politics, 2 November 2012)

“To be clear, my preference would be that the scenarios would still include at least the possibility over the long term that a separate currency could be put in place … I would personally prefer to see any period of continued use of sterling as a transition period leading to something separate. It might be a matter of years or it might be a matter of a generation, but I would prefer to see it in those terms of a slower separation of process rather than a one-off moment of independence.” (Evidence to House of Lords Economic Affairs Committee inquiry on independence, 24 October 2012)

“An Independent Scotland should seek to have as much control over its economy as possible, and so we support a timetable for transition away from Sterling towards its own currency.” (Scottish Green Party Briefing Note, November 2012)

Blair Jenkins, the head of the anti-UK campaignhas also published a paper acknowledging that the prospect of a separate currency is a real one:

“Some, as part of the Just Scotland process, have questioned whether Scotland, by retaining Sterling, would lose influence and crucial control over key aspects of monetary policy. The Fiscal Commission Working Group sets out what it sees as the balance of advantage for Scotland in the immediate post-independence period. It would, of course, be open to Scottish voters in the future to seek a different currency choice if they felt, at that point, it would be in Scotland’s best interests” (Yes Scotland response to STUC’s A Just Scotland interim report, 22 February 2013)

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