Does Salmond honestly want the pound?

Deputy First Minister Nicola Sturgeon claims that, in order to prosper, Scotland “needs full control over the economic levers” (your report, 18 February).

In the same issue there is a reasoned and thoughtful article by Peter Jones, in which he states that he no longer favours monetary union since it would not give First Minister Alex Salmond control over monetary policy and requires the UK Chancellor to “poke his nose into (Salmond’s) budgets”.

There seems to me to be a fundamental contradiction within the SNP’s desire for independence and its wish for a monetary union.

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Mr Salmond’s bravado speech on Monday seems to be saying: “We are so resolute in our quest for independence that we are going to force the UK Government to accept a monetary union which entails that we will continue to be dependent upon it.”

But should we smell a rat here? Does anybody really believe that Mr Salmond, contrary to Ms Sturgeon’s pronouncements, would be prepared to continue to share control of the economic levers with a UK Chancellor?

He knows the people of Scotland wish to have pounds in their pockets. If, by telling them what they want to hear, he succeeds in his campaign, he could very soon say that the nasty UK Government is not rolling over and letting him have the pound after all.

Then he would be in full control and could get the currency he really wants which, until very recently, was the euro. Does this sound too Machiavellian a plot? Perhaps not from a man who, to give one recent example, swore blind that he had taken legal advice on EU re-entry only to have Ms Sturgeon admit later that he hadn’t.

Colin Hamilton

Braid Hills Avenue


As a visiting Englishman who has spent his life in Hong Kong following the benefit of an education at St Andrews, I commend your editorial (“Alternative currency plan has to be put in place”, 18 February) as a clear and unequivocal statement of the economic and political reality: in the event of a Yes vote the rUK taxpayer should not and will not tolerate the liability for any future financial disasters north of the Border.

Likewise, you correctly point out what debt markets would make of First Minister Alex Salmond’s threat not to honour Scotland’s share of debts post partum.

Bond markets are cruel masters and in such a situation outlined by the SNP, it would be instructive to hear what risk premium the market would demand from a nascent country that has defaulted on its share of debt. Argentina might be an instructive place to look for a similar situation.

In the absence of a plan B from the SNP, might I suggest that it would also be instructive to look at the Hong Kong government’s peg of its currency to the US dollar. Created during a time of fiscal crisis in the mid-1980s, it has stood the test of time and beaten concerted attempts to by hedge funds et al to break it.

It also permits lower transaction costs than those cited by the SNP because of the unique mechanisms that keep the exchange rate floating in a very narrow band.

Business welcomes that stability and can plan for transnational arrangements for considerably lower transaction costs than Mr Salmond’s putative figure

The downside of such a peg is, of course, that, exactly as Governor of the Bank of England Mark Carney pointed out, such a mechanism cedes control of interest rate policy to a third party. That does not equate to ceding sovereignty and overall budgetary control in the way that joining a common currency union so obviously must.

Mr Salmond could do a lot worse than making a call to Hong Kong’s financial secretary. He might find his plan B already exists and has the advantage of being tried and tested already, and therefore trusted by the markets.

Tim Fitzsimmons



By proposing to adopt the pound sterling as the currency of an independent Scotland, it seemed to me that the SNP was being statesmanlike, seeking to reduce the adverse fiscal effect on the rest of the UK by not removing completely the oil revenue from its balance of payments calculations, and by avoiding transaction costs to businesses which trade mutually over the Border.

The Secretary of State for Scotland has not only restated that there will be no currency union, but also added that the loss of oil revenue to rUK will be fiscally neutral, and that transaction costs will fall more heavily on Scottish firms, owing to the ratio of trade between Scotland and rUK. In this case, what is his objection to independence?

By proposing to remain in or to join the European Union, the SNP was similarly aiming at achieving stability and continuity.

However, at the same time, the representative of the EU stated that Scotland could not be sure of joining if it became a separate country again.

This negativity is so marked that it can only be explained by accepting that the UK and the EU, which are both in need of substantial political reform, cannot stomach the idea of a relatively ancient country re-establishing a modern democracy, and showing that these two emperors are, democratically speaking, wearing no clothes.

Iain WD Forde

Main Street

Scotlandwell, Kinross-shire

Many comments about using the pound make a basic error, mixing up whether a currency is commonly accepted or whether it is legal tender.

Of course, you can go into any shop and offer different ways of paying rather than the pound, say dollars or euros, and the shop might agree to accept.

However, legal tender is a different matter entirely. You are obliged to use legal tender in payment, say for taxes, or accept it, say in a restaurant.

Bank of England notes are legal tender in England and Wales, but not in Scotland or Northern Ireland. They are simply commonly accepted by all parties.

Similarly, banknotes issued by Scottish and Northern Irish banks are not legal tender anywhere in England and Wales, but are similarly usually accepted as payment.

However, the banknotes issued by RBS, Bank of Scotland and Clydesdale Bank are fully backed up by the Bank of England, because it is the central bank of the UK, the lender of last resort as we saw in 2008.

That would not be the case after independence, so from then on their notes would not be considered the same value as Bank of England notes.

Phil Wheeler



For months, the Yes campaign has argued that the rest of the UK would take a rational and pragmatic approach after independence and agree a currency union, because it is in their best interests. Last week, the Westminster parties all firmly rejected that idea.

This week, Alex Salmond called their stance “insulting” and “demeaning” to Scots, and said the “bullying” will cause Scottish voters to react by voting Yes.

In other words, according to Salmond, the English, Welsh and Northern Irish can and will make rational and pragmatic decisions about Scottish independence.

Scottish voters, on the other hand, faced with their most important decision in three centuries, can be relied upon to vote emotionally, founding their choice in a mixture of historical grievance and spite for southern Tory toffs.

Someone please remind us: which campaign is insulting and demeaning to Scots?

Trevor Fenton

William Street