No more than the US Treasury can stop drug dealers over the world using the US dollar. Indeed it can be argued that the US Treasury policy de facto encourages the us of the US dollar as the drug dealers currency of choice.
The Adam Smith institute have just published this penetrating view.
“An independent Scotland would not need England’s permission to continue using the pound sterling, and in fact would be better off using the pound without such permission.
“There is very little that an English government would actually be able to do to stop Scottish people from continuing to use the pound sterling if they wanted to.
“As the American economist George Selgin has
pointed out, what the Prime Minister really means is that the Bank of England would not act as a guarantor for Scottish banks or the Scottish government. Lucky Scotland: the implied promise of a bailout from the European Central Bank is exactly what allowed Eurozone banks and governments to borrow cheaply and get themselves into a debt crisis.
“Scotland’s position would be closer to that of countries like Panama, Ecuador and El Salvador, which use the US Dollar without American “permission”, and,
according to research by the Federal Reserve of Atlanta, consequentially have far more prudent and stable financial systems than if they were part of a formal currency union.
“An independent Scotland that used the pound as its base currency without the English government’s permission, with banks continuing to issue notes privately and private citizens free to choose any currency they wanted, would probably have a more stable financial system and economy than England itself.
“It’s up to Scots to decide whether they want independence, but the Chancellor’s announcement today should be seen as a feature, not a bug.”
That is the truth. The whole Scots cannot use the pound argument is a scare story got up by LibDemCon and A Darling. In fact it would be great for Scotland as pointed out.
Getting politicians involved with monetary policy and banking is always bad news. Right at the start of the financial crisis in 2008 when there was a run on Northern Rock, a comparitively small bank, the wrong decision to nationalise the bank was made for for political reasons. There were a lot of Labour MPs in the North East. Wim Buiter, the best economist ever on the MPC got it right on day one. When interviewed he simply said, "Let it go bust". NRock was not to big to fail. There was no systemic risk if it failed and it would have stopped the spread of banking malpractice in its tracks. It would have been cathartic.
The disatrous RBS takeover of ABN Amro had already been waved through by the useless FSA but a bankruptcy of N Rock would have prompted a faster emergence of this disaster and more effective immedite action.
The final political disaster was G Brown waiving through the Llyods takeover of HBOS against competion rules. Done to ensure Labour retained a crucial seat in the Glenrothes by-election. Many HBOS workers lived in Fife in Glenrothes.
So as the Adam Smith institute point out Scotland losing control of interest rate policy is not necessarily a bad thing. All its given to England is a huge London housing bubble which will soon produce massive social unrest.
Scotland has nothing to fear and cannot be stopped from continuing to use Sterling!
PS Cable is as always talking rubbish. I quote from today's Guardian,
However, McEwan played down comments from UK
BusinessMinister Vince Cable suggesting it was inevitable the bank would relocate its headquarters from Edinburgh to London in the event of a "yes" vote.
