According to the Guardian, in a meeting with SNP backbenchers after his disappointing performance in the debate with Alistair Darling, this:
He [Salmond] said, using the pound without a formal pact – an option known as “sterlingisation” or the Panama option – was “quite attractive”, but insisted the Treasury would never allow that to happen because it would let Scotland walk away from more than £100bn in debt. “No UK chancellor would allow himself to be in a position where an independent Scotland gets away scot-free without the debt,” Salmond said.
Mr Salmond may have been misquoted. I may have misunderstood. But the notion that if an independent Scotland decides to use the pound in the manner that Panama or Ecuador uses the dollar (a quite sensible idea in itself, though it would require fiscal discipline), that somehow negates Scotland’s share of the UK national debt sounds delusional to me. At least, I suppose Scotland could default – Argentina does it all the time – but there are huge practical penalties to that. Lenders demand a high risk premium before they will lend to defaulters, particularly unrepentant defaulters.
Having written the above, I’ve just found another link confirming that Mr Salmond was not misquoted. He really is claiming that the famous missing Plan B is, in the event of the remainder of the UK refusing a currency union, for newly independent Scotland to refuse to take its share of UK debt.
“If the UK Government’s position is “‘thou shalt not be entitled to your own currency” then “of course we have no entitlement to take liabilities either,” Mr Salmond said.
“If we had a zero share of debt then Scotland would be in both balance of payments and budgetary surplus in the first year of independence. We wouldn’t be paying up to £5 billion in interest payments.
“That is the logical conclusion of the UK Government claiming all of the assets of the country – they end up with all the liabilities.”
Wow. To me, those words above look like a bigger misstep than anything he said in the debate.