Why would an independent Scotland expect a currency union with the UK?

[JapaneseMargaret]

I mean, I can see why they would, but doesn't that just totally undermine their desire for independence?

Am I missing something blindingly obvious...?

Was mostly American money that bailed out the UK banks, there are no Scottish banks.

Re bailing out the banks. Precedent (and law?) shows that banks are bailed out by the countries they are operating in. Had scotland been independent, and had scotland allowed such a bankingf crisis to develop then scotland would bailed out the proportion of the bank operating in scotland, which it could have afforded, not the entire bank.

I do wonder what an English Referendum would say about 'keeping' Scotland. I suspect England might vote yes to Scottish independence.

Again incorrect. When the crash happened RBS had more staff and customers in the rest of the UK than in Scotland. They have 24m customers globally, with over 17m in the UK. That's not a regional bank, that is you being misled by a name.

You are trying to shift the blame to Scottish inability to manage banking, when the truth is that the collapse was the result of greed and a fundamental failure throughout the entire system.

Scotland would leave itself in a very tricky position if it didn't take on its share of the debt, regardless of what currency it uses. Every developed country borrows and loans money to other nations, it's how the world economy works, if Scotland just said they wouldn't pay their debts no other country would trust them.

FWIW I have always thought a Parliament of the Islands is the way to go with local Scots, Welsh, N. Irish and English assemblies voting on local national issues but then coming together periodically to vote on issues of UK interest. Isle of Mann, Guernsey, Jersey and other Crown Dependencies might even wish to join in.

if Scotland just said they wouldn't pay their debts no other country would trust them

Scotland would never say that. They might say, "as you are not sharing assets we will not share the debt" but that is completely different.

McFox - yes HBOS/RBS had more employees outside Scotland but their dominant position inside Scotland is crucial to the local Scottish economy. A failure of HBOS and RBS would undoubtedly have had a huge impact on Scotland. I am not allocating blame - just saying what the impact would be. Potentially devastating for Scotland and less devastating for England &Wales and N.I

Wouldn't be defaulting as Westminster already said they would take full responsibility for debt.

Debt is also tied to currency, a brand new state not using same currency is under no obligation.

We also have a 10% share in BoE assets, it belongs to the UK not Westminster.

No assets no debt.

"An independent Scotland would in such circumstances have no debt, a budget surplus (because our current deficit is entirely down to UK debt repayments – without those Scotland would be in the black BEFORE it even factored in savings from different policy choices, like the £800m a year on defence), and a vast reserve of tangible resources, most notably oil, as security.
The rUK, by comparison, would have a debt of £1,500,000,000,000 and a huge budget deficit. If you were going to lend someone money, would you choose the guy living within his means with plenty of assets, or the guy who already owes his entire annual salary and is still spending more than he earns?"

No, the banking system was weakened by the issues you state McFox but RBS suffered more than the rest because of one Scot's ego. The "staff" (wherever they were based)had nothing to do with, weren't allowed any say in, the atrocious acquisitions he made or the ridiculous status ssymbol he built in Edinburgh. People in London and elsewhere tried to tell him. I was there! I would be funny if it weren't so tragic

Scottish GDP in 2008 was an estimated £145 billion. The cost to the UK of the RBS / HBOS bail out in 2008 was £88 billion. However the actual Scottish share on a per capita basis was £8.8 billion, and on the debt accrued by the Scottish registered banks which would have been an independent Scotland's liability is estimated at £2.4 billion.

Scotland could issue a currency backed by oil, timber rights and whisky instead of gold for example. That would be quite popular I suspect. A currency backed by real assets that people holding the currency have a legal claim on.

Asset based currency? The corrupt bankers would never allow that in a million years. How about they do something electronic and call it Scotcoin? A computer based currency is not as good as an asset based one but is harder to defraud and, if done correctly, is open and democratic.

Scotland only has the Pound Sterling because it had to be rescued by England in the 1800s when its banks failed. in effect, England just rescued Scotland again when RBS and HBOS got into difficulty.

It was the 18th century. They were tricked into investing their time and money in an inhospitable part of Panama, and told (by the English) to take wool, blankets etc to sell to the natives. This effectively bankrupted the Scots and they were forced into signing the Act Of Union in 1707. RBS and HBOS are going to need another bailout soon, they're still bankrupt. Without QE all the major banks would be.

One Scot's ego and greed upheld and encouraged the egos and greed of men and women from lots of other countries.

DoctorTwo - good post.

You are right about the banks needing another bailout. The bad loans are being held of balance sheet by shuffling them into subsidiaries. Creative accounting doesn't make the real economic issue go away though. Bad debts backed by assets that are not worth the value of the loan cannot be passed around forever.

The latest wheeze out of the EU is to mandate that EU citizens use their savings to buy up the bad loans from the banking system.

Riiiiight!!!!!.

That would be like asking us to put our savings in a bank that was about to go bust but without a Govt guarantee. No thanks.

Mark my words, by hook or by crook the financial black hole in the banking system and unsustainable Govt debt will be 'resolved' by taking ordinary citizens' savings and pensions. See Cyprus for details.

FannyFifer

Was mostly American money that bailed out the UK banks, there are no Scottish banks.

No, they quickly became 'British banks' when Gordon Brown wanted the English taxpayer to bail them out to save Scottish jobs, didn't he?

DoctorTwo

It was the 18th century. They were tricked into investing their time and money in an inhospitable part of Panama, and told (by the English) to take wool, blankets etc to sell to the natives. This effectively bankrupted the Scots and they were forced into signing the Act Of Union in 1707. RBS and HBOS are going to need another bailout soon, they're still bankrupt. Without QE all the major banks would be.

Yes, of course it would be England's fault. Of course. Poor Scotland, poooooorrrrr weeeeeee Scotland. Everything would be fine for you, if it wasn't for the evil sassenachs. yawn

ItsAllGoingToBeFine

Scottish GDP in 2008 was an estimated £145 billion.

The cost to the UK of the RBS / HBOS bail out in 2008 was £88 billion. However the actual Scottish share on a per capita basis was £8.8 billion, and on the debt accrued by the Scottish registered banks which would have been an independent Scotland's liability is estimated at £2.4 billion.

So what you're saying now is that you think Scotland should be responsible for just 10% of Scottish bank's debts and none of British banks ones. How - Scottish of you.

Either they're Scottish banks, in which case you get 100% of the debts, or they're British, in which case you get 10% of ALL the bank's debts - which was estimated by the NAO to be £850Bn.

The banking problems are an international issue.

The problem with scotland and england having the same currencies is that they would have to have the same economic polcies. This is hard to manage if you have two soveriegn nations. You just have to look at the Euro to see the mess that Ireland and continental europe are in.

Lets see whether the scots want independence or not. We can cross the bridge of deciding whether to share a currency if scotland does choose independence.

I am amazed that the SIP want a currency union, I thought they wanted independence
Until the euro crisis they said sterling was 'a mill stone around Scotlands neck' how times change

But Fanny regardless of debt, Scotland would be like a newly self-employed person with no credit record, or not much of one. It is naive in the extreme to try and portion out what has happened in the past and claim that Scotland is and will be 'in the black'.

I have no desire to see the Union broken up, but I am fascinated by the whole situation. What I would hate to see is a Scottish population vote 'Yes' on the basis of misinformation and blind hope that things will be as per Salmond's wish list, only to heartily regret it 10, 20 years down the line.

Scotland would be like a newly self-employed person with no credit record

But with a massive inheritance to fall back on.

Lets see whether the scots want independence or not. We can cross the bridge of deciding whether to share a currency if scotland does choose independence.

Yes that's how I naively thought things would progress. It seems sensible. If Scotland votes for independence then surely it's in everyone's interests to make sure the transition is smooth and that both economies can complement each other. That will require some negotiation from both sides.

There's an attitude that Scotland should be punished for wanting civic independence 'you've made your bed,' rather than a pragmatic view that that difficulties could be worked through.

I consider myself English although I have lots of scottish relatives. I don't care whether Scotland becomes independent or not.

I feel that SNP has changed voting rules to skew the result. (Ie. allowing 16 year olds to vote.) It will be interesting to see if allowing children to vote in an election makes any difference. It may well be that teens are too apathetic.

16 year olds can work,get married & join the army, not children then.

Yes...these scottish banks are so scottish that staff have been told they will lose their jobs if the end result is a 'yes' vote.

What bank said that? Barclays said they would make it work whatever the result of indyref & RBS has denied the comments attributed to them.

I heard it was RBS.