So what currency should Scotland use, then? I doubt making their own separate currency would be much better, since that tends to be an absolute nightmare economically (though that's pretty much the case every time you change currency). You could use the euro, but then again, see economical nightmare. Using the pound kinda makes sense IMO. There are enough problems already without factoring in implementing a new currency.
There is no question Scotland would need another currency. It sounds like a lot of effort to the layperson but that's because people just take it for granted that economists do their jobs and get exchange rate equilibrium pretty much right. Staying on the pound would be ignoring that.
We actually have a fantastically good example of the difficulties of changing to a new currency vs. the difficulties of having your currency price not reflect your labor markets.
Remember when the Euro was adopted? A lot of work, some of it expensive. But really a drop in the bucket. That's how hard it is to adopt a new currency.
Look at Spain right now. Their currency can not adjust to reflect their labor markets. Look at the unemployment. Look at the huge drop in national output. That's the scale of problem we are talking about when currency prices dont reflect labor markets.
Ask yourself, whose problems would you rather have, Spain around 2000 or Spain today?
(Of course the problem can also go in the opposite direction as well. If Scotland beats productivity in England then Scotland will have spiraling inflation problems until that inflation eats into incomes enough to balance the national account. There aren't as good examples of that (thankfully) but you can look to the recent inflation problems in China until they adjusted the exchange rate as somewhat similar).
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Topic: Scotland Decides, 18th September, 2014 (Read 33574 times)