I’m listening to the independence debate. Alex Salmond is arguing that if Scotland votes ‘yes’, they are voting for a currency union. That seems to me a strong argument for voting ‘no’; a currency union will hamstring the Scottish economy, because it will make Scotland subject to direction from London. He is also arguing that the Bank of England is an asset, and that Scotland’s acceptance of liabilities will depend on the currency union. This is a very unwise negotiating position. Liabilities need to be set against assets, but if the test is the currency, rather than Scotland’s share of genuine assets, it suggests that the Scottish government must be ready to throw away the main bargaining chip they have to achieve a worthless outcome.
On the other side, Alastair Darling has been offering some rather bad arguments of his own. One is the suggestion that you can’t have a finance industry if you don’t have your own currency. What? What about the Channel Islands? Another is the suggestion that if Scotland used the pound, it couldn’t borrow. Rubbish. Many of the assets now held by local authorities were based on borrowing through issuing bonds for public works. All Scotland has to do is to issue its own bonds. If it can’t do that currently, it’s because the Treasury won’t let it.