Analysis: Four options – and none of them is easy
AN INDEPENDENT Scotland would have four options when it comes to currency. It could continue to use the pound sterling, in co-operation with the UK government; it could adopt the pound sterling without the UK’s consent; it could adopt the euro, if that still exists; or it could establish its own currency.
The pound would – if Scotland secedes – probably remain the UK currency. Scotland could seek to join the remainder of the UK in a currency union, like Belgium and Luxembourg before the euro. That would provide for shared decision-making about monetary matters, and perhaps some aspects of economic policy. But it would need the agreement of the remaining UK state, and any decision about entry into the euro would be dominated by remaining UK concerns.
If Scotland were to adopt the pound without such agreement, it would forego a major element of the autonomy that usually comes with statehood. The pound can be expected to be managed and run by the UK government in its interests and under its control – so interest rate decisions, for example, would remain in the hands of the Bank of England, taking account of the English economy without regard to the Scottish.
Few states have used another’s currency for any length of time, and the experience has often been a sorry one. Argentina tied the peso to the US dollar at an excessive value – the main reason for Argentina’s economic collapse in the early 2000s.
Joining the euro directly would certainly require the agreement of the eurozone members at the time, and perhaps of all EU members. A close reading of the EU treaties suggests euro membership is not at present an automatic requirement of EU entry.
Creating a new currency would add to the disruption caused by independence. It would mean creating all the institutions needed to run a currency, including a central bank and a “full service” finance ministry.
There are no easy paths to running a currency as an independent state. It is one of the hardest choices to be made when it comes to independence.
• Alan Trench is honorary senior research fellow at the Constitution Unit, University College London.
Email to a friend
Print this page- Alan Pattullo: Dignity, not sanctimony, is required at Parkhead
- 300 jobs at risk as Ryanair axes five Edinburgh routes
- Suzanne Pilley trial: I kissed her goodbye then never saw her again, says would-be lover
- Rangers administration: Craig Whyte’s promise to step aside and hand Rangers over to fans ‘ludicrous’
- David Cameron is playing into the SNP’s hands, says Michael Forsyth
- Scottish independence: Spectre of border controls raised by top Tory
- David Cameron is playing into the SNP’s hands, says Michael Forsyth
- Scottish independence: Alex Salmond hits back at Tory ‘Bourbons’ in battle over devo-max
- Scottish independence: Anti-Scottish jibes boost separation, Michael Gove warns Right
- Scottish independence: Let Scotland vote on independence in 19 months, says Michael Moore
Looking for...
Featured advertisers
Jobs
Search for a job
Motors
Search for a car
Property
Search for a house
Weather for Edinburgh
Thursday 23 February 2012
Today
Light rain
Temperature: 7 C to 14 C
Wind Speed: 26 mph
Wind direction: South west
Tomorrow
Sunny spells
Temperature: 5 C to 10 C
Wind Speed: 29 mph
Wind direction: West
Comments
There are 199 comments to this article
Page 1 of 14
Brit-free
Friday, December 9, 2011 at 11:34 PMthe many tedious reasons why its a madness beyond description for a smaller entity to seek independence from the larger by the ridiculously absurd Indy Now .....he is so absurd that he will Demand ! that you prove that he is .....
Brit-free
Friday, December 9, 2011 at 11:28 PMone of his Masters got lost in Ottowa ......le autre Maitre etais perdu en Quebec ....quelle domage !
Brit-free
Friday, December 9, 2011 at 11:21 PMusual nonsense by the highly unpopular unionists ......they dont want to listen .....because they have no answer to the incontrovertible fact ........that we could do what so many post colonial countries who have broken free of the vile brit state have done before us .......we could shadow the english pound ., until we decided the best course of action to take ....it wasnt an absurd position when Canada ,Australia or Ireland amongst many others , did exactly that , indeed Ireland only ceasing to do so on the advent of the Euro ......dont let unremarkable historical precedence get in the way of your Scotland hating prejudices
Independence now please
Friday, December 9, 2011 at 05:20 PMComment removed by moderator
all politicians are the s*me
Friday, December 9, 2011 at 04:43 PMquebecs status may be dubious what is not is how different it is from the rest of canda. get on atrain in Ottawa and get of 3hrs later in Montreal and the differences are much greater than making the same 3 hour journey from York to Edinburgh.
Independence now please
Friday, December 9, 2011 at 02:24 PMComment removed by moderator
well informed
Friday, December 9, 2011 at 02:01 PM192 Because nobody would vote for anything unless they had a desire to do so! Where is the economic case for either side? Where is the evidence of an pre vote economic arguement?
Independence now please
Friday, December 9, 2011 at 01:58 PMComment removed by moderator
Independence now please
Friday, December 9, 2011 at 01:57 PMComment removed by moderator
Independence now please
Friday, December 9, 2011 at 01:55 PMComment removed by moderator
well informed
Friday, December 9, 2011 at 01:51 PM185 The Quebec vote to remain within Canada whether you think its about nationality or not didnt state it was based on economics but on desire! The majority be it all but the smallest margin desired to remain part of Canada. I didnt see any economic arguement being put forward by the pro Independence lobby in Quebec did you?
well informed
Friday, December 9, 2011 at 01:48 PM186 There is no LEGAL claim to Quebecs Nationhood as stated by the Canadian PM!!!! SEE 96!!!!
well informed
Friday, December 9, 2011 at 01:47 PM182 Do the Math! Scotland would have to be receiving over 160 billion from Westminster every year in order for it to be better off within the Union! Thats the Unionist economic argument!
Independence now please
Friday, December 9, 2011 at 01:47 PMComment removed by moderator
Independence now please
Friday, December 9, 2011 at 01:45 PMComment removed by moderator
Page 1 of 14
Your view
Please sign in to be able to comment on this story.