The biggest problem for any first world independence movement is the question of currency. Creating a new currency is a risk that can cost people their life savings and a currency union with the old country has its disadvantages. It also leaves the independence movement open to threats and fear-mongering, as weve seen in Scotland. In Quebecs case, having our own currency has some important advantages that cant be overlooked but no one say that Quebec would have to abandon the Canadian dollar the day after its independence. Despite its violent departure from the UK, Ireland basically continued a kind of currency union with the UK after its independence. In 1926 the government of the new Irish Free State established its own separate currency, the Irish pound, which was anchored to sterling. Every pound in circulation was backed ultimately by a deposit in the Bank of England of sterling banknotes or of British government bonds. This was neither monetary union nor complete monetary independence, but it was an arrangement that both sides agreed best served their interests: Ireland got a strong and stable currency; the UK suffered no loss to the international reach and prestige of sterling, and both sides avoided an increase in the cost of doing business with an important trading partner. This arrangement lasted until Ireland chose to join the European monetary system in 1978. In the meantime it gave the Irish government the freedom to make its own choices and the British government also preferred to preserve it, even after Ireland became a republic in 1949. The most striking thing about the arrangement was that it was implemented with the full agreement of the UK government and the active cooperation of the Bank of England, whose senior managers worked with the Irish currency commission to solve the many technical problems it raised. Despite the fact that the border itself remained a continuing source of tension and violence, and despite fresh memories of a bitterly fought guerrilla war, all parties set to work with reasonable goodwill to do what needed to be done.
Posted on: Wed, 24 Sep 2014 00:55:53 +0000