Guy Debelle, the assistant governor of the Reserve Bank of Australia (RBA), believes Scotland could become a testbed for cryptocurrencies if it gains independence from the UK.
Debelle’s remarks were addressed to the audience at the Financial Times Camp Alphaville event in London, in a rather unconventional fashion for a banker: in a T-shirt, speaking through a telepresence robot.
Independent Scotland, Debelle reasoned, has a compelling reason to consider the option, as if the Scots vote for independence this September, they will be “short a currency”.
“The Scots can go back to experimenting with a multitude of currencies, bitcoin and the like, and we can just sit back and see how it goes.”
Bitcoin could also be challenged by local alternative digital currency scotcoin, which was introduced amid a boom in country-specific coins issued early this year.
Experimenting with free banking
At the event, Debelle also elaborated on Scotland’s economic history.
For instance, he noted that Scotland has a “bit of experience” with competing currencies dating back in the 18th and 19th centuries. He recalled a brief period in Scotland’s history when the country was able to issue its own currencies, independent of the Crown.
Though, he notes that this trial was ultimately unsuccessful:
“They tried this in the 18th and 19th centuries. It worked for a while, but eventually it fell apart.”
However, a number of panellists disagreed with Debelle’s comments, although they were open to the idea of Scotland experimenting with digital currencies, The Guardian reports.
Even Debelle admitted he is not willing to forecast the demise of cash just yet.
Competition vs government monopoly
Kevin Dowd, the author of a recently published paper on bitcoin, agrees with Debelle and believes Scotland’s past banking experiment was in some ways a success.
Dowd’s paper, published by the Institute of Economic Affairs, argues that the UK should effectively privatise the pound and liberalise the monetary system, thus introducing competition in what has been a government monopoly for centuries.
Dowd says that the process would loosely resemble the privatisation of the telecom sector, which brought about a lot of innovation along with better services and lower prices.
Entrepreneur David Galbraith, one of the co-creators of Yelp and RSS, disagreed, however, saying innovation in payments will not happen directly. He pointed out that there are hundreds of payment start-ups today, but nearly all of them are trying to build new services on existing platforms.
He also believes the need to control the protocol renders bitcoin irrelevant in a hypothetical Scottish independence scenario.
Scottish flag image via Shutterstock