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Old 07-09-2014, 11:37   #1993
Damien
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Re: Will Scotland Leave the UK?

Quote:
Originally Posted by LondonRoad View Post
I still think it will be a no vote. However, if it is a Yes vote I think that common sense would prevail and there would be a currency union. The finance sector isn't the only sector that has to be considered and no currency union would be detrimental to other sectors on both sides of the border.
It will be detrimental but not to the degree that it's common sense to have one. Sterling would be subject to a Foreign nation's economy. If Scotland took on a lot of debt and/or went on a spending spree that would impact upon the value of the Pound. If Scotland took on too much risk it would be up to rUK to underwrite it rather than Scotland due to rUK being the bigger entity - look at Germany and Greece - which would mean Scotland has a incentive to have a much riskier banking sector because it's the mugs across the border underwriting it. Incidentally this situation isn't reversed. rUK wouldn't be able to turn to Scotland to bail it out.

It's no where near common sense for rUK to join into this. The only way it would work is if rUK were in charge of regulation of the finance sector, put limits on what Scotland could spend and how much debt they would take on, and set all monetary policy.

In other words a political union to match the monetary one. This is what we already have and Scotland wants to leave it.

rUK will not bail out iScotland. It's political suicide for politicians this side of the border to contemplate such a scenario. We didn't join the Euro either and the only reason people think the Currency Union is a foregone conclusion is because Yes have been making up economics as they go alone.
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