The pound is Scotland's currency

"The pound is Scotland’s currency" appeared in the Sunday Herald on 28 April 2013.

The pound is Scotland's currency.

That may seem like a statement of the blindingly obvious. However, it is a simple truth worth repeating, for – given some of the sabre-rattling of recent days by George Osborne and his lieutenant Danny Alexander in the Tory-led Treasury - people could perhaps be forgiven for thinking otherwise.

The pound is Scotland’s currency every bit as much as it is England, Wales and Northern Ireland’s. Becoming an independent country will not change that – Sterling is a jointly shared asset which we are entitled to inherit.

And, as I made clear last week, if the UK Government’s position is that we should not be entitled to our own currency and other shared assets, then the only logical extension of that argument would be that an independent Scotland should not inherit any share of the UK’s debts either.

For any UK Chancellor, at any time, that sort of argument is playing with fire. For this particular Chancellor, whose forecasts have been consigned to the dustbin as international agencies downgrade the UK’s credit rating from AAA and whose borrowing continues to pile up, it would be the height of folly.

The suggestion Sterling is not Scotland’s currency betrays the kind of high-handed arrogance which completely undermines the claims of Unionist politicians that the UK is currently a partnership of equals.  But economic reality dictates that a formal currency union with a shared Sterling area will be in the overwhelming interests of the rest of the UK as much as, if not more than, in Scotland’s interests.

Any UK Government would be cutting off its nose to spite its face if it decided otherwise and handed Scotland a debt-free clean slate on day one of independence.

Added to that, the massive boost that Scotland’s exports, including North Sea oil and gas, give to Sterling’s balance of payments is another good reason why, after a Yes vote in next year’s referendum, the UK Government will be only too keen to agree a common currency area with Scotland.

And – despite the scaremongering – the Chancellor pointedly refused to rule out a Sterling area when he was in Scotland last week. When asked the straight question, he ducked it, because he knows the reality.

This weekend, in a bid to keep the scare story running, Scottish Secretary Michael Moore has suggested that the Scottish Government needs to set out "robust” proposals for a post-independence currency.

That statement suggests Michael Moore has not been following the debate.

Perhaps Michael Moore might want to apologise to four world-renowned economists, including the two Nobel Prize Laureates, for dismissing their work so glibly.

Those economists on the Fiscal Commission Working Group produced an extremely detailed report which examined an independent Scotland’s currency options and concluded that a formal currency union was the best option.

Mr Moore might like to take time this weekend to read the report those highly regarded experts have produced, and he might be enlightened as a result. The Fiscal Commission Working Group’s credentials are impeccable and their views might be of use to Mr Moore and his colleagues whose dismal policies risk running the UK economy into the ground.

The Westminster sabre-rattling reached a nadir with the claims that an independent Scotland would see the end of its own distinctive banknotes. We already have our own Scottish banknotes and have done for many, many years under Westminster rule. So no one seriously believes the Tory claims that we will not be able to do so as an independent country.

It is a ridiculous claim, which doesn’t stand up to the slightest bit of scrutiny. The issuing of Scottish banknotes is underpinned by the 2009 Banking Act, which will stay in place as part of a post-independence Sterling zone. That means Scottish notes are already backed on a £1 to £1 basis by the Bank of England.

The UK government has stated that there is no legal bar to an independent Scotland having Sterling as its currency, and even Alistair Darling, the leader of the No campaign, has described a Sterling area shared between Scotland and the rest of the UK as “logical” and “desirable”.

Meanwhile, David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, has agreed a Sterling area would be perfectly viable and has dismissed George Osborne’s claims as scaremongering.

The pound is Scotland’s currency and will remain so in an independent Scotland. And, just as their boasts about the UK’s AAA rating crumbled, the No campaign’s claims to the contrary will turn to dust.