Scottish Currency Debate: Mev Brown

Allied to the Scottish currency debate in the event of independence, there is an issue over the future of Scottish banknotes

As the currency debate drags on, many voters don’t know who, or what, to believe.

An analysis of current legislation and the currency debate so far provides some answers. Assuming a “Yes” campaign victory in September, Independence Day will be 24 March 2016.

George Osborne, the UK Chancellor, has ruled out a currency union with an independent Scotland. Alex Salmond, Scotland’s First Minister, says he’s bluffing. But what if he’s not?

The UK’s currency arrangements are unique and historically complicated.

Even in Scotland, Scottish banknotes are not legal tender. They are, however, “legal currency” insofar as they are issued with the permission of the UK Government and guaranteed by the Bank of England (BoE).

Scottish banknotes are issued subject to numerous Acts of the UK Parliament, most recently the Banking Act 2009, along with part 3 of the Scottish and Northern Ireland Banknote Regulations 2009.

Under existing regulations, Scottish banks are required to hold reserves of Bank of England banknotes and UK coinage, and have balances with the BoE to the same value of the Scottish banknotes issued – approximately £4 billion.

So, while it is true for the UK Chancellor to say that a “Yes” vote… [click for full story]


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