Letter: Euro obstacles

The anti-independence voices continue to argue that Scotland would be forced to join the single currency upon independence, but they are clearly blind to recent electoral developments in continental Europe.

The return of the French socialists and the struggle of the Greek pro-austerity parties to form a coalition are already sending chills down Brussels’ spine.

If the euro is to survive, Europe will need to have an honest rethink about euro membership, entry processes and deficit regulation. Countries will no longer be able to swan into the eurozone and the bloc may review its compulsory entry requirement.

The treaty on the functioning of the European Union states explicitly that any country wishing to join the euro must join the Exchange Rate Mechanism for at least two years.

For Scotland to join, its currency would need to be pegged to the euro and would, therefore, require the co-operation of the Bank of England.

Sterling would need to operate, within the normal fluctuation margins, without severe tensions for a minimum two-year period. Given that there is no prospect of the UK ditching the pound in the near or distant future, it’s difficult to see how such a requirement could be fulfilled.

A new process of transition would need to be formulated at European level to allow Scotland to join the currency directly from sterling. Would the classic “EU fudge” do it? Possibly, but it would take time to reach.

Moreover, an independent Scotland would need its own central bank – another requirement for euro entry – to work alongside the ECB. So, on a technical level, it would arguably be a greater challenge to get an independent Scotland to join the euro than to keep out of it.

Toni Giugliano

Firrhill Loan

Edinburgh