Reasons for Independence Part 2 - Currency
1. Does Scotland need a whole new currency?
2. How will that new currency come about and will it be messy and difficult or straight-forward and simple?
3. How will it help create jobs and wealth for the people of Scotland?
4. Will I be able to buy things from abroad and go on holidays?
To answer the first question is simple, we don't. All we need to do is rename it back to the Scots £ and alter the design to match. Some people are of the opinion that we need to create a whole new currency but this is totally unnecessary, as you will see further into the article.
In answer to the second question. Once the date for the changeover has been decided upon, all banks, post offices and financial institutions which issue currency within Scotland will start issuing the Scottish currency from that day onwards. The currency they hold at that time would be traded with the Scottish main clearing bank for Scottish currency (notes and coins). This would be arranged prior to the changeover date to avoid a last minute rush.
This does two very important things. All institutions start issuing Scottish currency at the same time and the foreign currecies traded with the clearing bank to obtain the neww currency would give the clearing bank a huge influx of £ sterling and other foreign currencies as traded for by the institutions. This allows Scotland to get a head start and won't need to import or buy foreign currencies from day 1.
Example of currency change in the UK;
On the 14th February 1971, UK residents got to spend their last valentines day using Pounds, shillings and pennies, among other denominations. At midnight on the 14th, all currency in the UK ceased to be legal tender. At 00:01 on the 15th February Decimalisation occurred and all new coins and bank notes took the place of the old notes and coins. This had been advertised long in advance and many people had already started exchanging their old currency prior to the changeover date. Prior to 1971 there were numerous programmes adverts and leaflets sent out to advise people of the coming changes so that come, what was referred to as D-day, people would be able to fully understand the new system.
An independent Scotland wouldn't need all this fuss and confusion though. As all that would change is the design of our new coins and notes whwwich would be produced by our own mint. The denominations would remain the same as well. Historical note. The £ Scots has been around since the 12th century and was introduced by King David I of Scotland. The bank of England took over the production of the pound after the forced act of union in 1707. As such, Scotland could simply revert to the £ Scots as our currency.
Whether the Scottish government will do this or change that name will be a matter for discussion at the time when this is due to happen. Either way, the changeover will not be difficult and we will not need to rework our whole currency as happened with decimalisation.
How will having our own currency create jobs and wealth for the people of Scotland? While many economists have various replies to this question, they don't all agree with each other on how to do that. Andy Anderson however, a Scottish economist, has given a very good answer to that.
Simply put, our currency becomes an internal currency, only used within Scotland. Just like many other countries who have their own currencies. The main difference being that it is not internationally traded so as to avoid money men trying to devalue it on currency exchanges.
To answer question 3. It all comes down to supply and demand. Firstly, The scottish government starts a programme of building and replacing our old and inadequate infrastructure, as well as building new schools, hospitals and other social buildings as needed. A new national grid and nationalised energy company to run it so that never again will we be forced to pay for hiked up fuel costs. Not forgetting a new Scottish mint to print and produce our new notes and coins.
To do this, the Scottish government prints a set amount of money for these projects and pays out some at a time as the projects proceed. Materials for these new building projects is sourced from companies within Scotland using materials also sourced within Scotland, as much as can possibly be found.
This increases supply and demand from within the country meaning that companies have to take on more workers from within Scotland. The companies that the resources are bought from then have to bring in more workers to cope with the rise in demand for resources as well. This goes from the building design companies right down to the quarriers who provide stone and other materials for the upgraded and improved roads and buildings and even caterers having to take on extra staff to provide for the increase in demand for their services also.
This then has a knock on effect for retailers. All the people that are working in these new jobs are going to want to improve their own lives and that of their families. So they will go out and buy additional goods like extra groceries, new clothing, TV's and white goods, bikes, cars houses etc. They will also want to be entertained so nights out may become more frequent. Thus providing additional income for restaurants and night clubs etc who will in turn also need to take on more staff to keep up with demand.
This increases our economy massively and we then have less people unemployed and claiming benefits. All these additional workers pay tax on their wages and the goods they buy which in turn goes back to the Scottish government and allows them to balance this against the money created in the first place and to thus allow them to set up additional projects. This avoids inflation rising and as more and more people take up well paid employment, the more taxes the government will receive to keep the books balanced. It also increases Scotlands assets and wealth as a nation.
Finally, how do I get holiday money or buy items or goods from abroad. This is also quite simply answered. If you need holiday currency you simply buy it direct from the main clearing bank or from a financial intitution that issues currency including post offices, travel agents and banks etc.To buy goods from abroad you just use your bank card or credit card to pay and the clearing bank changes your money into the currency required just as the UK clearing banks do just now.
Example, say you want to buy a new gadget from a company in Japan. You go online and order it, pay for it using the £ Scots and then the bank or credit/debit card issuer takes the money from your account and either uses it to purchase the required Yen to complete the transaction or uses their own supplies of Yen and the company then sends you your goods. This is the exact same thing that happens just now.
While this is only one option of how things can work, it will be up to the people of Scotland to vote in a new independent government that they believe will deliver this or something similar. To find out more about Andy's work within the indepenedence movement and his writing on currency please select one or both the following links.
Here you can contact Andy and or order his books on currency
A video made for the Campaign for a Clean Scottish Currency.