History of sterling currency - who's currency was it?

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Tangled Metal
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History of sterling currency - who's currency was it?

Postby Tangled Metal » 21 Jan 2021, 1:32pm

Something about currencies got me wondering about the origins of the UK pound sterling. Where did it originate? Is there direct line back to one nation?

A comment on the remoaning thread and the last few Indyref 2 threads got me thinking abstract and theoretical thoughts along the line of this...

Scotland was independent and had its own currency once, Ireland and Wales I'm not sure about but suspect Ireland did have currency but not as a nation. Wales I've assumed was just considered part of the English sphere of influence and has mostly used English currency. So in some ways the currency we're using could be considered English owned and controlled that the other nations use whilst part of a union with England.

So what could happen if England became independent of the union? Could England take its currency and nothing the other nations could do about it?

I told you I've had some abstract and theoretical thoughts. I don't think they could as I'm not even sure it wasn't created post Scottish union with England and Wales. Change from gold standard ?

Jdsk
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Re: History of sterling currency - who's currency was it?

Postby Jdsk » 21 Jan 2021, 2:15pm

https://en.wikipedia.org/wiki/Pound_sterling#History
https://en.wikipedia.org/wiki/Pound_sterling#Currency_of_Great_Britain_(1707)_and_the_United_Kingdom_(1801)

Tangled Metal wrote:So what could happen if England became independent of the union? Could England take its currency and nothing the other nations could do about it?

There's no general answer... it depends entirely on the details of how the split occurs.

Jonathan
Last edited by Jdsk on 21 Jan 2021, 4:14pm, edited 1 time in total.

PH
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Re: History of sterling currency - who's currency was it?

Postby PH » 21 Jan 2021, 2:54pm

Tangled Metal wrote:So what could happen if England became independent of the union? Could England take its currency and nothing the other nations could do about it?

Weren't Greece threatened with expulsion from the Euro a few years ago, unless they imposed the ECB's conditions?
I don't know what the mechanisms are, but it's hard to see why a nation would wish to use a currency that it had no influence over. That cuts both ways and is different to a monetary union of which there are several.

Tangled Metal
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Re: History of sterling currency - who's currency was it?

Postby Tangled Metal » 21 Jan 2021, 3:54pm

Could England unilaterally leave the union and keep control of sterling? If the answer is affirmative then it's evidence of England having unequal power in the union right there. It effectively owns the currency with other nations subservient in currency matters.

I'm not sure of the facts here so I'm basically asking. There's people on here who seem to know about these things or are good at researching the answers.

Jdsk
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Re: History of sterling currency - who's currency was it?

Postby Jdsk » 21 Jan 2021, 3:57pm

Tangled Metal wrote:Could England unilaterally leave the union and keep control of sterling? If the answer is affirmative then it's evidence of England having unequal power in the union right there. It effectively owns the currency with other nations subservient in currency matters.

I see what you mean about the asymmetry, but the question is unanswerable without the details of the postulated split.

And to go back one click: how could England ever make that decision... it doesn't have a representative legislature... let alone a democratic representative legislature...

Jonathan

Jdsk
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Re: History of sterling currency - who's currency was it?

Postby Jdsk » 21 Jan 2021, 4:03pm

PH wrote:I don't know what the mechanisms are, but it's hard to see why a nation would wish to use a currency that it had no influence over.

1 Not having that influence removes the ability of politicians to act in ways that are politically desirable but economically damaging.

2 It reduces transaction costs in trading with other countries, and especially with the big gorilla.

https://en.wikipedia.org/wiki/Currency_substitution

Jonathan

Tangled Metal
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Joined: 13 Feb 2015, 8:32pm

Re: History of sterling currency - who's currency was it?

Postby Tangled Metal » 21 Jan 2021, 6:00pm

Jdsk wrote:
Tangled Metal wrote:Could England unilaterally leave the union and keep control of sterling? If the answer is affirmative then it's evidence of England having unequal power in the union right there. It effectively owns the currency with other nations subservient in currency matters.

I see what you mean about the asymmetry, but the question is unanswerable without the details of the postulated split.

And to go back one click: how could England ever make that decision... it doesn't have a representative legislature... let alone a democratic representative legislature...

Jonathan

It's why I said it was hypothetical. Assume a mechanism existed say EVEL type arrangement was in place for example. English MPs voted for leaving the Union after the party stood and got voted into government on a manifesto pledge to leave the Union. Very hypothetical so the details on that are not needed so much as the possible legal method England could leave the Union taking the currency with it. Can a rump of the Union ever be left without a currency or using another sovereign nation's currency by a newly independent England. TBH mechanism is less important than whose currency is it?