Make foreign currencies legal in UK - Douglas Carswell

Currencies Douglas Carswell is calling for a range of currencies to be made legal tender

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Parliament is to debate a call for foreign currencies to be made legal tender in the UK.

Such a move would protect savers by allowing them to hold the currency least likely to be devalued, Tory MP Douglas Carswell told the Commons.

He said people could then "extricate themselves from the monetary masters that hold them all captive".

But Labour's John Mann dismissed the plan, saying Parliament should "defend the great currency sterling".

MPs decided to give Mr Carswell's idea - set out in a 10-minute rule bill - another hearing on 20 January, but it is unlikely to become law.

Mr Carswell, a euroscpetic Conservative who represents Clacton in Essex, said legalising other currencies would allow consumers to shop around for the best deal on goods, possibly via smartphone applications.

'Credit balloon'

In the Commons he said the Bank of England's "quantitative easing" programme - effectively "printing money" - had seemed "progressive" but "turned out to be a disaster" which had cut sterling's value.

He added: "A credit balloon was created by reckless management when it came to the money supply."

Mr Carswell claims the two dominant post-war economic theories - monetarism and Keynesianism - have both failed, and radical thinking is needed amid the ongoing global financial crisis.

Start Quote

when I go to the corner shop to buy my Midget Gems, I wish to use sterling”

End Quote John Mann Labour MP

He accepts that government ministers and the Bank of England would be highly reluctant to relinquish control of the nation's currency, but insists he is serious about the proposal.

Wealthy individuals routinely convert their cash into Swiss francs or other currencies deemed to be safe havens to be then held in bank accounts abroad.

Some large department stores in London take euros and some other foreign currencies, such as the US dollar and the Japanese yen, but the official currency of the UK remains sterling.

No MP objected to holding a debate on Mr Carswell's plan.

However, Mr Mann, who represents Bassetlaw in Nottinghamshire, told the Commons during humorous exchanges: "We should defend the great currency sterling against these demands for euro-fanaticism."

He added: "He [Mr Carswell] could always ask for the Iranian Rial and other currencies to be used.

"[But] when I go to the corner shop to buy my Midget Gems, I wish to use sterling."

'Completely free market'

Giving citizens a choice of currencies was proposed in a Conservative government Treasury paper in the late 1980s, as an alternative to the single European currency.

But the idea dates back to the early 1970s, when economist Friedrich Hayek first proposed the denationalisation of currencies.

Professor Hayek - the godfather of Thatcherite economic policy - put the idea forward as a potential cure for inflation, then the biggest threat facing the UK economy.

In a 1975 paper for the Insititute of Economic Affairs think tank, he argued that governments should be stripped of the power to force their citizens to use currency issued by them at a price they specify.

Neil Mellor, a currency strategist at Bank of New York Mellon, said Mr Carswell's plan would have to be executed on a massive scale for it to have any impact on the economy.

"It doesn't sound like something that would be taken too seriously at the Bank of England, but we will have to see," he told the BBC News website.

Josh Ryan Collins, of the New Economics Foundation, who helped launch the Brixton pound - one of a handful of complementary currencies designed to be spent in local shops within a specific area of the UK - also sounded a note of caution.

"I would have some sympathy with Douglas's position and his critique of the current system, which isn't really democratic.

"But I wouldn't say a completely free market in currency is necessarily the solution."

He said it could increase instability and currency speculation, and greater democratic accountability was needed instead, as well as the break-up of the big banks.


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  • rate this

    Comment number 112.


    Thanks for clearing that up. I've little understanding of economics. Shame you couldn't help explain more as i'd love to know!

  • rate this

    Comment number 111.

    105 - Yes, this is precisely what Carswell is actually doing - he has no interest in the actual legal tender argument as he knows there is Zero chance of it being passed. He is seeking to provide a platform to rail against further quantitative easing by the BOE. Mann could have saved himself some pointless rent a quoting if he had remembered Carswell is as close to a UKIP MP as you can get.

  • rate this

    Comment number 110.

    106 No you are correct. The definition of legal tender is that which you cannot refuse in payment of a debt - as opposed to agreeing in advance to accept another currency. You can use any mutually acceptable currency you like settle a debt , you can only be forced to accept legal tender.
    What Carswell is doing takes more than 400 characters to explain - but it has nothing to do with legal tender.

  • rate this

    Comment number 109.

    Bemused by this.

    We are free to transact any currency we choose. “Legal tender” defines what we are compelled to accept, if offered, in settlement of a debt. Does anyone really want to be compelled to accept foreign currency against their will?

    Anyone can already hold funds in foreign currency if they wish. Many banks offer the facility.

    Am I missing something?

  • rate this

    Comment number 108.

    This will lead to a Forgers charter. How would any employee in a shop or bank be able to recognise a shekel or peso are legal tender. Another Tory crackpot idea from a list of Tory crackpot ideas. But you can see a trend. Tory eyes always light up if money is mentioned and they think they can screw us over.


Comments 5 of 112


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