| Topic: | Re:Currency Union | |
| Posted by: | Andy Rooney | |
| Date/Time: | 03/09/14 13:42:00 |
| The punt ceased to pursue parity with sterling when it joined the European Monetary System at its inception in 1979. Prior to that Ireland had been suffering inflationary pressure as a result of being tied to the pound during the UK's high inflation period in the 70s, and had been exploring other ways of escaping this influence before EMS came along. That experience is reasonably applicable to Scotland too. There's nothing Westminster can reasonably do to stop Scotland keeping the pound - just as the US dollar is de facto currency in many places whether Washington likes it or not - but the price of doing so without a formal agreement is giving up any influence on interest rates and the money supply. In the same way Scotland could in principle decide unilaterally that the Euro would be its currency, but it would have to buy the notes and coins to put into circulation, presumably for sterling, and it would be handing over control of rates and the money supply to the ECB. |