In the second of a two-part series, financial IT systems expert Peter Ryan writes for Common Weal on his latest policy paper, ‘Paying Our Way’. which would make it easier for the Scottish Government to launch a new currency after independence and would allow us to start the process now, before independence and as part of a future independence campaign. You can read about his paper here and you can read the first article in this series here.
In the 29 years I have worked in Banking and Finance 30 European countries have changed their currency and another 4 have redenominated theirs. In many cases (such as the introduction of the Euro) I have been directly involved. This has led me to the conclusion that while there is a clearly defined process for creating a new currency (which we described in the Common Weal White Paper Project document “How to Make a Currency”), a national currency cannot be introduced overnight.
The idea of waiting for the perfect moment to start introducing a currency while a comfortable soundbite is not workable in the real world. It is like starting a family or getting married. You can set yourselves all the tests in the world; am I earning enough? is our future secure? have we minimised all risks? But there is no perfect time. Sometimes you have to believe in yourself.
Like all the big decisions creating a currency takes planning, it takes preparation, it is not something that can be done overnight.
There is this idea that we cannot start the introduction of an independent currency for Scotland or even decide when to introduce a Scottish currency until after an independence referendum has been won. However, this has not been the case with other independence movements. For example, before the fall of the Berlin Wall in November 1989 an official exchange rate had been established for a new Estonian currency and a competition for a design of a new Latvian currency had been announced. Indeed, the USA introduced its own currency in 1775 (a year before the declaration of independence).
There is nothing to stop the independence movement announcing a competition for the design of a new Scottish currency as part of an independence campaign. We can make it an inclusive competition. So instead of the design being chosen in a bank in Edinburgh by grey men in grey suits the competition is open to all Scots. We can have a children’s competition to decide the design of the copper coins, students designing the silver coins, notes being designed by art therapy classes. By opening up the design of the banknotes to all Scots we can demonstrate how a new inclusive Scotland will be different from a centralised United Kingdom.
Similarly, a Scottish Payments Initiation Service can be introduced before independence. Not only will this save the Scottish government and councils money but will also demonstrate how an independent Scotland will be able to run its own economy. It can demonstrate how there is a willingness to sort out our distorted retail market and allow our local shops and small retailers to compete with the giant supermarkets and multi-national online retailers on a level playing field.
By making these preparations early, before an independence referendum we can allow the Scottish people to visualise how life will be different in an independent Scotland. An independent Scottish currency should be at the heart of any independence campaign, not something to be afraid of.