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
    0

    Comment number 112.

    110.&111.

    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
    +1

    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
    +1

    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
    +2

    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
    +1

    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.

  • rate this
    +2

    Comment number 107.

    Hahahahahaha....England can't get its collective head around accepting pound sterling notes that happen to have been printed in Scotland. If it can't accept the currency of the United Kingdom because it is printed somewhere above Carlisle, how can it handle getting its head around actual other currencies.

  • rate this
    0

    Comment number 106.

    Also thier seems to be some confusion over 'Legal Tender' & 'Promissory Notes' I'm not 100% on the laws but isn't it technically legal to use any currency and its at the discretion of the trader as to whether it is accpetable or not to cancel a debt?

  • rate this
    0

    Comment number 105.

    "You have to consider that there are several countries that have actually made the currency of a foreign country legal tender and indeed replaced their own currency with it"

    Don't countries usually do this becuase their local currency is pratically worthless? I hope this is not a hint to the fate of the £

  • rate this
    0

    Comment number 104.

    I look forward to being able to spend some of the currently non-legal tender notes I have. Particularly the gold £100 notes and the orange £500 ones.

  • rate this
    +1

    Comment number 103.

    Gold costs almost exactly the same as it did in 1985, roughly 17 barrels of brent crude oil. Price it in fiat currency though, and it looks to have increased in value. Its the value of the currencies which has fallen, thats one of the many ways governments and central banks have of transferring wealth from the public, back up the pyramid.

  • rate this
    0

    Comment number 102.

    Proposal should clarify :-
    (i) exch rate for these foreign currency transactions e.g. market rate or commission that you would pay at FX bureau anyway ?
    (ii) any floating currency or just major ones such as $, euro, yen ? If the former handling costs will be very high.
    (iii) would there be attempts to make reciprocal arrangements e.g. if UK accepts Yen would Japan accept sterling ?

  • rate this
    +1

    Comment number 101.

    What's the catch.

    I don't trust these people in Westminster or their banking buddies, they are in the process of yet another sting. I don't believe it has anything to do with shopping or cash in the public's pocket, more of foreign invested money by tax evaders being cashed then transferred here. The only shopping taking place will be luxury goods in Swiss francs?

  • rate this
    -1

    Comment number 100.

    84.
    David_L

    it is you who does not understand Economics.

    What 'gamble' do you think you're taking right now, by having everything in Sterling?

    You are the worst gambler as you have not spread your risk.

    ...but don't let me spoil your notion that the UK currency is "as strong as oak" - or whatever colonial tripe you have absorbed.

    What this MP says doesn't matter, it's going to happen anyway

  • rate this
    0

    Comment number 99.

    You have to consider that there are several countries that have actually made the currency of a foreign country legal tender and indeed replaced their own currency with it - usually this has been the US Dollar. Zimbabwe was I believe the last country effectively do this in 2009.
    However to be made legal tender would be impractical - at the till exchange rates are dreadful.

  • rate this
    +1

    Comment number 98.

    What a ludicrous idea, far from being a solution to anything this idea would;

    1) Cause Chaos in shops and other institutions.
    2) Increase the amount of forged currency in circulation.
    3) Devalue our own currency.
    4) Allow shopkeepers to inflate prices.
    5) Increase the risks of money laundering.

    It's time our MP's addressed real problems instead of inventing them to sound like they are busy!!!

  • rate this
    0

    Comment number 97.

    Having had foreign currency accounts in the UK for most of my life I fail to see what this article is about. When I want to pay for M&S pants in UK I use a credit card like everyone else. You can do that now you know. Even in ******* M&S. And have it deducted from whatever currency you want. Get a life.

  • rate this
    -1

    Comment number 96.

    An MP taking an imaginative line on solving a problem - well done that man and now I'm going to e-mail and say well done for thinking of it. Come to the voters with a solution and just another problem and you shall be rewarded!

  • rate this
    -1

    Comment number 95.

    Zalimbekir @ 91

    Why do you peddle the myth that paying for sex is illegal in the UK
    I'd check your facts....

  • rate this
    0

    Comment number 94.

    Considering the confusion already caused if you try to use scottish money in england at most retailers getting them to accept other foreign currencies would just result in more till staff running to a manager to see if its okay for you to pay in that currency. Fraud would be easier as well since with rarely seen notes its harder to tell the real ones from the fake ones

  • rate this
    0

    Comment number 93.

    89. macka

    Again, Gold has not increased in price that much - the USD has lost and continues to lose value with "QE" etc. Compared to other commodities priced in USD Gold has remained quite flat.

    However, the fundamentals are yet to exert their influence.

    Currencies, for thousands of years, end up pegged to Gold sooner or later - this time will be no exception - there is no other alternative.

 

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