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Currency Confection

Having read Mark Carney’s thoughts about an independent Scotland continuing to use the pound, I thought I’d check something out.

Several committed Yes voters have pointed out to me that Sterling is a reserve currency and as such can be used by any country who would wish to do so. The idea was apparently mooted in Hong Kong before they decided on a Hong Kong dollar pegged to the US dollar, much in the same way that Denmark’s currency is pegged to the Euro.

I wanted to find out about the inevitable difficulties which would ensue from an independent Scotland simply adopting Sterling without a formal currency union. I decided to ask Google the question ‘Could Scotland use the pound as a reserve currency?’

The auto complete suggestions were getting the idea until I got to the word ‘reserve’

scotpound

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2 Responses

  1. As I understand it, countries can hold reserve currencies to support their own currency; to make international payments for imported goods and services; and as a hedge against exchange rate fluctuations. I found this link which might help ==> http://internationalinvest.about.com/od/foreigncurrencies/a/What-Is-A-Reserve-Currency.htm

  2. Thank you for that Sir!

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