This is rather peculiar as in Scotland and Northern Ireland certain commercial banks are authorised, most recently under the Banking Act 2009, to issue banknotes alongside the Bank of England.
In accordance with the terms of the 2009 Act and the associated banknote regulations and rules, “issuing banks require to fully back their notes at all times with ring-fenced assets held partly in Bank of England notes and UK coin and partly in deposits held at the Bank of England.
“This, of course, means that holders of banknotes issued by the Scottish banks receive the same level of protection as that provided to holders of Bank of England notes.”
If the Bank of England were to push the matter, for some unfathomable reason, Scottish notes could be returned to the issuing bank for the assets that back them to be used to purchase Bank of England notes. The Bank of England would find itself forced to hand over the £3.5 billion of assets (some of which would be English notes in any case) to the Scottish banks.
At that point no-one could stop the Scottish banks from subsequently buying English notes to replace the Scottish ones like-for-like.
Chancellor George Osborne’s approach is a bizarre one, aimed at frightening those who have no idea of the technical ins and outs of how the UK’s currency works but an absolute nonsense to anyone who does.
Scottish banknotes aren’t just conjured out of thin air, they’re representations of Scotland’s assets lodged in the Bank of England vaults, and will continue to be so whether Scotland is independent or not.
WHEN I was in California recently, expatriate Scots commented on the negativity of the referendum debate but they did not lay the blame entirely at the feet of the Unionists.
They believed it was the inevitable outcome of the SNP’s inability to provide a distinctive and coherent definition of what it meant to be Scottish – beyond not being English.
From the other side of the pond it seemed that, after so many centuries of interchange and intermarriage, our language, literature, ideology and rituals were pretty much identical.
As happened in the United States itself, modern British culture was hugely influenced by the Scottish Enlightenment and it looked to our American cousins as if we were intent on knocking down a house we had largely built.
(Dr) John Cameron
St Andrews, Fife