The glittering array of academic advisers has, unsurprisingly,
pronounced that an independent Scotland should retain sterling as its currency (your report, 11
The glittering array of academic advisers has, unsurprisingly, pronounced that an independent Scotland should retain sterling as its currency (your report, 11 February).
Their chairman praises the report as “a workable blend of autonomy, cohesion and continuity.
It is a “well-engineered model”. Well-engineered, autonomous, cohesive, and continuous?
I beg to differ. The report is long on theory but short on practical application.
What acts as oil in the well-engineered money mechanisms in the UK is cash, mostly banknotes from ATMs.
These circulate freely and settle millions of daily transactions. The economic advisers have failed in not recognising the unique characteristics of money in Scotland; they being markedly different from south of the Border.
The Scottish banks’ note issues total about £4 billion (source: HM Treasury paper), together with an estimated £1bn of Bank of England notes.
If independence happens, then the implications for the Bank of England in its supervisory and deposit protection roles will be profound.
It is, therefore, extremely doubtful if the Bank of England will, understandably, be prepared to continue with the current arrangements of holding backing for the note issues of banks domiciled in what would be an independent foreign country.
Consequently, it will no longer be possible to issue Scottish bank-notes and the resultant £4bn void in Scotland will be filled by an increase in Bank of England sterling currency notes.
First Minister Alex Salmond’s pursuit of independence has the grave potential of destroying a unique feature of Scotland: the right of its indigenous banks to issue banknotes, a feature he himself once described as “a proud tradition and hugely popular with the Scottish public”.
It really will be poetic justice when one of the legacies of independence is the termination of Scottish banknotes and their widespread replacement by notes bearing the title “Bank of England”. Let’s make sure that “independence” never happens.
(Prof) J Robin Browning
General manager (retired)
Bank of Scotland Ravelston Park