I didnt write this but def worth a read. Very informative and written by someone who knows what they are talking about. Neil Munro Fiona Ross I would like to put forth some info regarding financial, economic and currency debates: iScotland and rUK currency union - facts which confirm Osborne, Balls and Alexander are just playing hard faced poker games to try and scare the electorate. The truth is that Sterling hasnt crashed despite the £1.39 Trillion of debt carried by the UK because it still, presently very substantially, benefits from Scottish exports contributing to the UKs overall balance of payments (BoP). Upon Scottish indy and if iScotland withdrew from the Sterling Zone then Scotlands exports will no longer contribute to the rUKs BoP, resulting in the rUK BoP deficit doubling from around 5% to around 10% of GDP. It is for this reason and to protect against capital flight from the Sterling Zone the the Bank of England (BoE) will be a Lender of Last Resort (LoLR) to iScotland. Here, rUK would continue to benefit from the Sterling Zone with Scottish Exports in, as she presently does. However, without Scottish Sterling Zone exports an overnight doubling, after 25th March 2016, of the rUKs BoP deficit would be catastrophic for sterlings value and, in all likelihood there would be a run on the pound as the money markets attempt to dump Sterling upon the date of independence. The run would only exacerbate downward pressure on the £ value. Too much Sterling sold floating around the international and the BoE printing more money, upsetting the pounds exchange rate as they are 2 factors creating too much Sterling in the financial markets after the date of independence. Too much £ = value drops. Thats why, and one of the reasons of, the sensible 18 month time gap between YES and actual Indy - negotiations for a £ currency union and a stable internal single financial market called the Sterling Zone and no sudden jolt downwards to the Balance of Payments by taking Scotlands exports from the Sterlings Exports total. Its also so rUK adjusts effectively to losing 10% of its economy, new debt (£1.6tn) ratio - 115%+ of GDP - same time keeping Scots exports in the Sterling Zone & as part of the pounds BoP. In short, Scottish exports are required by the £ & crucial to £s value in the balance of payments. However if it continued to reject a £ Currency Union (which Westminster wont) beyond 03 2016, & did not sort a deal rUK will attempt to mitigate the dumping of the Pound by the international market in a crisis by raising interest rates - catastrophic. This would only taking pounds from the domestic financial markets in an attempt to stabilise the £, but it will fail just as it failed during the infamous Black Wednesday - Google it to see the effects of the Pound sliding. This is why BoE, said LoLR (provide financial security) to iScotland, & provides money market confidence in the Pound & protect against capital flight. In short, the pound desperately needs Scottish exports to help keep down the BoP deficit, and rUK requires an effective and holistic union to secure the Sterling Zone. Also, YES she will negotiate its fair share of UK debt (- assets). Debtsll be repaid to the UK Treasury, NOT the money markets & INCONCEIVABLE that the rUK would wish debt be paid back in anything other than the Sterling thereby, ipso facto, bringing about a. £ currency union. Practically the rUK cant of course, reject a Sterling Zone. If it does itll blow HUGE holes in its feet. I suspect, however, upon a YES result common sense, will prevail & a pragmatic solution will be sought.
Posted on: Wed, 27 Aug 2014 09:19:36 +0000
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