Sir Mervyn King, who led the Bank of England for around 10-years, suggested “Sterlingisation” - using the pound without the back up of a central bank - would have been the best option for an independent Scotland on STV’s Scotland Tonight show.
“I was disappointed in both sides in the referendum. I thought that there was an answer that would solve the independence question - the currency issue. And that is that nothing happens. Scotland just carries on using sterling,” he said.
“I think that would have been totally feasible there was no need for an independent currency, that wouldn’t have posed any threat or difficulty for an independent Scotland. And I see absolutely no reason why it would have caused a problem for the Bank of England to allow banks to keep on functioning in Scotland.”
His comments were welcomed by former First Minister Alex Salmond who described an unofficial currency union – sterlingisation – as “Plan B, if you like”. When questioned if he would support sterlingisation at a second independence referendum Salmond said we should “see what emerges at that time” but “it’s a very reasonable option to have”.