The currency of compromise should be on the agenda

THE independence debate has been taking a strange turn recently.

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At the same time as the opinion polls show that many voters aren't really fired up by the question of what currency an independent Scotland would use, politicians on all sides seem to be talking about nothing else.

The three main pro-UK parties have moved to definitively rule out the idea of a currency union (or at least their leaders at Westminster have … we don't really know how much their Scottish leaders supported this).

But this doesn't seem to have budged the SNP leadership.

They're still saying that this is the only arrangement they're willing to contemplate.

Scotland would continue to use the pound sterling, which would avoid the inconvenience and the transaction costs of changing our money and would probably mean the Scottish Government could expect to borrow money at the same rate as the UK.

But we'd have to agree terms with the rest of the UK about things like overall borrowing levels, taxation, interest rates, and the governance and financial regulation of banks.

The UK could seek to attach many other conditions before agreeing, especially if it meant going back on this new implacable position.

It's clear that the UK parties could change their stance if they choose.

THE Westminster election in 2015 will give them all the chance to seek a mandate for a new position if they wish to.

Also, it would seem extraordinary if the incoming government at that point, just months after Scotland had voted Yes to independence, just point-blank refused to sit down and even discuss reaching an amicable agreement.

It will be in both countries' interests to work toward a friendly and co-operative relationship, and a smooth transition.

But that's all for later.

Where we are right now it seems to me that both sides are bluffing, and it comes down to campaign tactics, not responsible govern- ment.

SALMOND is saying that even with a landslide for independence, the concept of an independent currency is inconceivable, so it's currency union or nothing.

Osborne and co are saying that they can bind the hands of the next UK Government. Neither position stacks up.

I've argued for ages now that we should at least lay the groundwork for a new Scottish currency.

Completing the task might be a longer process, and indeed we might even decide never to go the whole hog.

But being ready and prepared, should the need arise, could be vital.

It could give us the negotiating space we need to avoid unreasonable conditions being attached to a currency deal, and it would leave us clear about where we're going if that deal simply can't be done.


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