Split over money

Doubtless, we all sympathise to some extent with Dr Ian 
Robertson’s plea for clarity on the economic impact of 
independence (Letters, 28 November), but is the expectation of certainty actually reasonable?

Last week, politicians were falling over themselves claiming that the Institute for Fiscal Studies report predicting what will happen over the next 40 years either supported or under­mined the case for Scottish
independence. I don’t recollect the institute producing an 
authoritative report eight years ago warning that western banking practices were bound to lead to economic 
disaster, so why trust them to foretell events decades ahead?

What happens in the next 40 years is dependent on many factors, not least the 
wisdom or folly of governments and, of course, “events, dear boy”.

Another highly amusing 
report yesterday quotes the former Czech president’s assertion that, although the aspiration to 
retain the same currency when the Czechs and Slovaks split failed, the subsequent adoption of distinct currencies was a complete non-event, causing no 
difficulties whatever. Yet, the wiseacres point to currency as a major potential problem for the break-up of the UK!

Perhaps, in the end, we non-experts can only follow our gut instincts, and it may well prove the wiser path.

Alan Oliver

Battock Road

Brightons, Falkirk

I NOTED with considerable 
interest the comments by the former Czech Republic 
president, Vaclav Klaus, that it was “impossible” for that 
nation to keep a monetary union with Slovakia when Czechoslovakia was partitioned in 1993 
(28 November).

These comments have been seized on by Unionists who use it as criticism of the potential for an independent Scotland to remain within the sterling zone.

What the reports curiously fail to mention, however, is that while both the Czech 
Republic and Slovakia retained a 
customs union and freedom of 
movement of labour, the monetary union was only conceived as a temporary measure. Both these nations were, therefore, always destined to adopt their own monetary policy, creating 
obvious political tensions.

In addition both republics 
established their own central banks. These situations would clearly not be the case with an independent Scotland in the sterling zone.

What this example makes clear is that political factors are vital in creating and sustaining monetary unions, and 
members must be willing to give up their independence in matters of money, credit and interest. An optimum currency area is a region no part of which insists on creating money and having a monetary policy of its own.

If there is a lesson it seems to be that even in an optimum 
currency area such as Scotland and the rest of the UK, markets will force any currency union apart unless there is the clear 
political desire to make it work.

Alex Orr

Leamington Terrace

Edinburgh