More lies from a Yes supporter. Thats not what he said at all actually. So thats a lie right there. The discussion this clip is taken from is about Sterlingisation, iScotland using rUK Sterling. He is saying that right now the Bank of England is backing the notes in Scotland that are currently issued and that this will continue, for how long he doesnt say. The broader conversation is how an independent country like Scotland would be able to manage adopting the Sterling if there is no formal currency union in place. (The preferred option by everyone) Basically iScotland could informally adopt the usage of the pound sterling but there are certain caveats to this. The biggest and simplest to explain are that 1. There needs to be a very similar financial operational policy/procedure in place by the 2 countries (basically iScotland would need to have a similar banking and economic infrastructure to rUK post independence), 2. There needs to be a lender of last resort (central bank, but this is in no way guaranteed to happen) 3. There needs to be significant reserves in place of GDP in the country adopting anothers currency (this could be around 25%, so if iScotland had a GDP of £100 mil. wed need £25 mil. in the bank) I just made those figures up as an example btw. The whole thing is MUCH more complicated than this though and factors in business and trade, the IMF and a host of other issues all to do with the credibility and fiscal stability of the country adopting the others currency. Theres also a small thing called divergence, which is where the 2 countries seem to be pulling in 2 different directions (broadly speaking) which is kind of what the whole independence thing is about. When there is divergence, as opposed to convergence (in the case of the Euro) this makes the whole Sterljngisation issue a lot more difficult also. Ultimately what anyone on the NO side has said all along is that of course iScotland could use the pound, but there is a whole raft of hoops that need to be jumped through first, and in the interim period while the new government and banking system is being set up (at massive expense to the newly minted iScotland tax payer) then the Bank of England will of course continue to back the pound in Scotland.
Posted on: Mon, 15 Sep 2014 21:54:39 +0000
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