The sun might be setting on one of the few remaining vestiges of the British Empire; the pound sterling. The venerable currency’s value has fallen to new lows prompting predictions of its demise, and the collapse of the United Kingdom.

The pound might be worth less than one U.S. dollar within three years, Quantum fund cofounder and George Soros associate Jim Rogers told the BBC. Disturbingly, current currency prices indicate that Rogers might be optimistic.

Is the United Kingdom an Emerging Market?

The pound was worth $1.22 USD on October 17, 2016; but it had been trading at more $1.30 less than a month before, Business Insider’s Oscar Williams-Grut noted. That caused analysts at Morgan Stanley to ask: “Is the UK behaving like an emerging market (EM)?” Citi Research went even farther and issued a report titled How the UK became an EM.

The analysts pointed to Brexit, low oil prices and Britain’s massive account deficit; the biggest since World War II, as evidence to verify their thesis. Citi Research analysts noted that the pound has been behaving like an “emergency market nation’s currency” for some time.

They pointed out that the pound lost 21% of its value during the first three quarters of 2016. To make matters worse, banks in the United Kingdom lost 30% of their value during the same period.

The idea of Britain as an “emerging market” is hard to swallow because the United Kingdom is still the fifth largest economy in the world. It is also a nuclear power and London is a major center of international finance. A better description might be that the UK is a declining market.

Will the Pound lose Reserve Currency Status?

All that has prompted speculation that pound sterling might lose its status as a reserve currency.

The International Monetary Fund (IMF) will be forced to strip the pound of reserve currency status if there is a “hard Brexit,” Ravi Bhatia; S&P’s director of sovereign ratings for Britain told The Independent. A hard Brexit would involve Britain leaving the European Union (EU) completely with no good trade relations with Europe. That would happen if the UK and EU are not able to hammer out a new trade arrangement or “soft Brexit.”

If that occurred it would spell disaster for the UK; because it might be impossible for London to function as a major financial center. Banks and other financial institutions and hundreds of thousands of financial sector jobs would leave the country.

A major result would be to turn London into Vienna; a large old city dependent almost entirely on a tourist economy. The City and the Docklands might become ghost towns while the rest of London eked out a living catering to tourists.

Disturbingly some Europeans might want a hard Brexit in order to drive the financial industry to their shores. They might have little incentive to negotiate a workable arrangement for Britain’s departure.

Will Pound Collapse Break up the United Kingdom?

The collapse of the pound might be the catalyst of the breakup of the United Kingdom. Scotland would have incentive to stay in the UK with a weak pound.

The prospect of moving their savings to more stable Euros might prompt Scottish voters to leave the United Kingdom and join the European Union. Scotland’s first minister; Nicola Sturgeon, is fanning such fears with recent statements.

“What we have now in the UK, particularly if it comes out of the single market is instability and uncertainty and lost economic growth,” Sturgeon said on October 14. “This would be a debate about what gives Scotland the best prospect.”

Sturgeon is demanding another referendum on Scottish independence like the one that failed in 2014. That lays the basis for a greater political conflict and more uncertainty which will drag the pound own farther because Prime Minister Theresa May opposes a new referendum.

“This debate has changed from 2014,” Sturgeon said. “Those who argued against independence said that it was very much against the economic certainty and stability of the UK versus the uncertainty of independence.”

Sturgeon might be using the threat of independence to force May’s government to go back on Brexit. The First Minister may also be hoping to scare English and Welsh voters into changing their minds on Brexit, with the threat of losing Scottish oil money. The threat is certainly a valid one because the United Kingdom needs Scottish oil.

“If Scotland leaves they are going to take their oil with them, and the pound could go down a great deal,” Rogers told the BBC. “It would certainly go down under one US dollar.”

Is Bitcoin now Safer than Pound Sterling?

It looks as if the pound sterling is no longer a safe investment. Investors seem to be staying away from it, and average Britons might be following their lead.

Bitcoin prices rose to their highest level since August on October 17, 2016; $639.91 or £524.16 that does not seem to be a coincidence. Both investors and British subjects trying to protect their assets might see the digital currency as a safe haven as the pound loses value. It looks as if many people now see Bitcoin as a safer investment than the pound; which indicates a far higher level of fear, than either the media or the governments involved want to admit.

The pound’s survival seems to be at the mercy of the politicians. If they cannot work out a soft Brexit; and satisfy Scottish demands, the pound’s role as a reserve currency and a major trading medium might end. That means Britain’s days as a major economic power might be numbered.

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