Serious economists not associated with the ‘No’ campaign have lined up to explain that Scotland could easily launch her own currency. The chief danger, identified as far back as the McCrone Report, would be of that currency being too ‘hard’ and so with a tendency to appreciate in value, to the detriment of Scottish exporters. However that problem could be easily solved by pegging its value to that of another currency, the Pound, the Euro, or (perhaps more prudent, for reasons I’ll come to later), the US Dollar. England, on the other hand, desperately needs a currency union with Scotland. You see, Sterling used to be backed by gold reserves. There was a vault at the Bank of England full of gold bullion. Margaret Thatcher decided it would be a good idea to sell most of it off. That was kind of her thing. She chose the worst possible time to do so, just before the 80s gold boom. The USSR, which bought quite a lot of it, proved to have a better handle on the state of the markets, and made a killing on it. Gordon Brown later sold off much of what was left. All this happened, however, without much effect on the strength of the Pound. Now why could that be? Could it possibly be due to the fact that the UK had by then discovered an alternative? A different kind of reserve to underpin the currency? Black gold?
Posted on: Thu, 11 Sep 2014 12:58:54 +0000
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