Negativity

I'd seen it suggested, before the Bank of England floated the idea today, that setting negative interest rates would be a way to encourage lending and spending. Reading up this evening, I saw Denmark actually set a rate of -.2%, in July last year. Surprising, I thought. Denmark is a small, northern European country, with tremendous renewable energy reserves, a sensible defence force, decent social provision, an educated populace and so on - just like we would be. If its economy is a basket case like the UK's, I thought, then why hasn't Alistair Darling been bellowing about it before now? So I checked. The reason Denmark set negative interest rates is because its currency (yes - it doesn't use the Euro but pegs the Danish krone) is so strong, and so attractive to investors who are piling into it that its strength needs to be curbed. Precisely the situation the McCrone report, in the 1970s, would arise with a Scottish pound.