see my thing below
being pegged to sterling isn't the same thing as using sterling, though. That was my whole point at the start of this.

The reason they have a problem with it on economic grounds is that you have no control over interest rates or economic policy. Let's say Scotland continues to use the pound but sets a higher base rate to the Bank of England. Financial transactions between the countries become fucked, because I can move £1,000 from an English to a Scottish bank and make more money, effectively making the currencies worth different amounts even though they are the same.
( the mighty badger Aphrodite, on a bar stool, by your side, Mon 15 Oct 2012, 15:25, 1 reply, 13 years ago)

The problem with it is that you have to use the same interest rates, as we did for fifty something years we were pegged to sterling.
That can cause problems, but at the same time you get the benefit in terms of international trade because your currency is percieved to be stable, which is a serious difficulty for new countries.
The only reason the Irish Free State didn't use sterling outright was because of petty nationalistic concerns, not having the King's Head on the banknotes and so forth.
( Dr Preference AjcuiVd289, Mon 15 Oct 2012, 15:30, Reply)

Yeah, that was kind of my whole point.
Probably not well articulated. You can't do what we're talking about and hope to be able to completely set your own economic policy. There's a belief within the treasury that even Salmond setting taxation levels too differently from the rest of the UK scuppers his ability to use the pound, although that's not a certainty.
( the mighty badger Aphrodite, on a bar stool, by your side, Mon 15 Oct 2012, 15:34, Reply)

That's all true.
Except the bit about the belief within the treasury. Well, that belief maybe there, but it's bullshit. The Free State, and later the Republic, had completely different tax rates to the UK, without it hindering our ability to use the pound. Though we did from time to time suffer from our inability to fully control our monetary policy.
( Dr Preference AjcuiVd289, Mon 15 Oct 2012, 15:42, Reply)

Yes, but Ireland wasn't tied up in the middle of a world-wide destabilisation of the financial markets back then.
The concerns are to do with how the markets and world financial bodies, credit ratings, etc, will respond to, on the one hand, the UK spouting on about fiscal prudence, and on the other, Scotland effectively pissing the same currency up a wall. It's a point of strong concern in some areas of the treasury, it's got the capacity to be an absolute clusterfuck, and is partly why my missus wouldn't work on scottish fiscal policy despite that being what they wanted when she was brought up here from the Treasury.
( the mighty badger Aphrodite, on a bar stool, by your side, Mon 15 Oct 2012, 16:00, Reply)

Except that Ireland was doing this in the late twenties and early thirties which were, as you may recall, a worldwide economic clusterfuck.

( Dr Preference AjcuiVd289, Mon 15 Oct 2012, 16:02, Reply)

Good point.
I think it's more about how the markets are stablised and destabilised, now, though. Very different from back then.
( the mighty badger Aphrodite, on a bar stool, by your side, Mon 15 Oct 2012, 16:18, Reply)