THE ECONOMY
Change for drachma on the Clapham omnibus?
JOCK BRUCE-GARDYNE
Anyone remember the launching of the £1 coin? Probably not. I do, since I had the job of breaking the bubbly. We pro- ceeded to my bank, where they were all lined up to hand over a shiny golden handful to me in the full glare of the television lights. Sadly the television boys did not share the Treasury's opinion of the newsworthiness of this great event. No- body turned up except for a young man from local radio with a hand-held mike. There was much recrimination in the Treasury newsroom.
I would not, for one moment, be so sacrilegious as to make invidious compari- sons with the launching in Antibes last weekend of Mr Lawson's revolutionary blueprint for a free market in the currencies of the European Community. Yet there were familiar aspects.
If the truth be told, the one pound coin was not my personal brainchild. I just happened to be the Minister around at the time of its journey down the slipway. But then I have suffered from some totally unfounded doubts about the authorship of the free currency market scheme. Mr Lawson seems to have shown, for an author, remarkable insouciance about the somewhat dismissive reviews it received from the other Finance Ministers at Anti- bes. Could it conceivably have been, I have wondered, that this 'wizard wheeze' (as Denis Healey might have called it) had been pressed into the Chancellor's hands by clever Mr Alan Walters — the Prime Minister's private economic guru — and that he was entirely delighted to have it nibbished by his eminent colleagues?
There was an interesting sequel to those events of long ago. The one pound coin was pronounced to be 'legal tender' throughout the United Kingdom. (I remem- ber I had no notion what the concept or 'legal tender' actually involved. For those who still share my innocence I should explain that 'legal tender' simply means that you have to take the coinage in question in settlement of a debt, although you do not have to give your debtor change — which means that it is not a very useful status to enjoy.) Now my Scots compatriots were up in arms about the one pound coin being 'legal tender' in Scot- land, since Scottish banknotes were — and are — not legal tender in England. And the Bank of England was not going to touch with a bargepole the idea of giving Scots
bank notes 'legal tender' status. For they are issued by the Scottish commercial banks, and the Bank had visions of being required to bale out, let us say, a Royal Bank of Scotland flutter in a Blue Arrow rights issue, if it had conceded legal tender to Royal Bank pound notes. The end- result is that Scotland sticks to grubby £1 notes, which make me feel quite proud of my foster-child in England every time I cross the border.
Nigel Lawson does not appear to have tackled this aspect of his blueprint for the future in Antibes (there were precious few details that he did tackle, come to that). But I would not myself put long odds on. the survival of Royal Bank of Scotland notes in open competition with the green- back, or the issue of the Federal Bank of Germany.
This, in fact, seems to have been the serious reservation about the free currency market scheme voiced in Antibes by the minority such as Holland's Mr Ruding who bothered to take it seriously at all. If we were to have a Darwinian currency en- vironment, Mr Ruding reckoned, there
were no prizes for naming the currency which would prove the fittest: the deuts- chmark. Then all the other central banks and finance ministers would have their fiscal and monetary policies effectively chosen for them by the Bundesbank, and Mrs T could whistle for her national sovereignty. Mr Ruding forbore to ex- plain how this prospect would differ from the present condition of the members of the European currency club. But then Mr Lawson equally forbore to explain how he contrived to predict that his scheme would lead to a different outcome. What mat- tered — as he brusquely informed as on the wireless on Monday — was that it was his scheme, 'worked up in the Treasury', and only scurvy knaves (like me) could imagine otherwise. Ah, well, at least I do not foresee a repetition of the marvellous row between the Bank of England and the Treasury about who invented the safety net for the BP flotation which gave us all so much innocent enjoyment in 1987. More's the pity. Meanwhile M. Jacques Delors's rival vision of a Europe where we all fill in OUT football pools in ecus does not seem to be collecting many influential friends. The smaller Community governments — the Dutch, the Danes, the Luxemburgers — are increasingly dismayed by the surrender of tax and monetary autonomy which it would imply — at quite an early date. More to the point the great Herr Pohl, the Chairman of the German central bank and guardian of the deutschmark, weekly dis- tances himself further from the enthusiasm of the Social Democrat members of the Bonn coalition government, and sounds more and more like what Mrs T would call 'one of us'. It is true that M. Delors's former — and future? — ministerial chums in Paris back him up manfully. But he will need more friends than that.
The basic trouble with the Delors plan, which Nigel Lawson rightly identified from the start, is that it offers no provision for democratic accountability. We may de- plore the politicians' meddling in the Bank of England's valiant attempts to preserve the value of our own money. But if they destroy our savings, at least we can turf them out. If M. Delors's Central Banker of the European Community destroyed our savings — or, more plausibly, our jobs by excessive monetary stringency — there would be no such redress.
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