Currency unions between sovereign states are a dangerous
business for ordinary people as Greeks under the hammer of Troika-imposed
austerity will confirm. Or Italians, whose grand coalition of all the parties is
systematically destroying living standards and pensions in the name of the euro.
Or Spanish people living in poverty as unemployment climbs above 26%.
So when Bank of England governor Mark Carney, addressing business
people in Edinburgh yesterday, stressed the dangers of a currency union that
doesn't impose shared fiscal policies on all its members he was only stating
the obvious. But at least he was bluntly honest.
"The euro area
is now beginning to rectify its institutional shortcomings, but further, very
significant steps must be taken to expand the sharing of risks and pooling of
fiscal resources. In short, a durable, successful currency union requires some
ceding of national sovereignty," he said before delivering his real
message.
Carney then confirmed that if this year's referendum vote
goes in favour of independence, the Treasury in London will want a major say in
Scotland's tax and spend plans before it agrees to any sterling currency union.
As a Treasury spokesman explained: "Governor Carney
today highlights the principled difficulties of entering a currency union:
losing national sovereignty, practical risks of financial instability and
having to provide fiscal support to bail out another country. This is why the
UK government have consistently said that, in the event of independence, a
currency union is highly unlikely to be agreed. The Scottish government needs a
Plan B."
Scotland’s first minister Alex Salmond’s response is that he
does indeed have a plan B. It is to simply go on using the pound without any
currency union agreement – a kind of self-supporting Scottish pound. So we are
talking about a globally tradable currency, with no reserves behind it, in a
country where the banks are amongst the ropiest on earth - what a recipe for
disaster!
The 2008 bailout of RBS cost the taxpayers £45.2 billion. Scotland's
annual output is just £216bn. At present, RBS has loans and investments of £1.3
trillion, equivalent to more than six times that. It also has £36bn of toxic
loans in its “bad bank account” and faces fines for wrongdoing that could be as
much as £1 trillion. And we haven't even mentioned the Bank of Scotland, which
posted an £8bn loss last year. What price would Scotland's population have to
pay to bail that lot out?
The economic choices for ordinary Scots are not looking good,
either way. Inside the union it's austerity for generations and misery for the
poorest. In an independent capitalist Scotland the choice is either a currency
union where key decisions on spending are still imposed by the Treasury or a level of fiscal uncertainty as a
new currency tries to find its feet in a market that is descending into turmoil.
Just look at what happened to the Turkish, South African and other currencies
this week.
But there is another way to resolve the currency question
and the political and economic issues too. We need to move away from a
nationalist agenda for a capitalist Scotland to one where we have a say on what
kind democracy, what kind of constitution, what kind of economy, what kind of
currency ordinary people want.
With that as the focus of a campaign for a “Yes” vote, we could
turn the referendum away from narrow nationalism into a debate about what real
self-determination means. The message should go out loud and clear: we don’t
want the rule of the banks and corporations wherever we live or a political
system that leaves the elites firmly in control.
And that would undoubtedly inspire people in England, Wales
and the north of Ireland to find their own route to challenging and defeating
the power of the common enemy.
Penny Cole
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