IN this series of articles, members of the Scottish Currency Group outline the case for a separate Scottish currency – the Scottish Pound – to be established as soon as possible after independence; highlight the transformational opportunities this will bring to address economic and social challenges; and answer questions about how the change is likely to affect households and businesses.
THIS and following articles by the Scottish Currency Group provide answers to frequently asked questions about currency in an independent Scotland. It is based on my experience of giving more than 50 talks to Yes groups across Scotland since 2019. More information can be found on the SCG’s Facebook page and in our Q&A report.
Why does Scotland need its own Currency and Central Bank?
To enable the Scottish Government to run the country’s economy in the best interests of the people of Scotland with control over our own currency as well as the other levers of economic policy – such things as setting interest rates and having full control of fiscal policy, and thus how much to spend and tax.
A separate currency will also require companies and individuals to separate Scottish assets and revenues from any rUK ones (because they will need to maintain accounts in Scotland and sterling in England), making it possible to easily identify what is liable to Scottish tax.
READ MORE: Will Scotland need to join the euro to join the EU? What the experts say
This will best allow the democratically elected Scottish Government to decide on priorities for spending and funding all the things we as a nation need.
Scotland needs to be a currency issuer, not a currency user. Having our own currency means we can ensure the state only borrows in our currency and thus never accumulates debts in foreign currency. Having large foreign currency debts is what usually causes economic problems for states. No state need ever default on a debt in its own currency or have trouble paying the interest.
What will the new currency be called?
This will be for the Scottish Government to decide. The Scottish Pound seems to be the most popular choice.
Why not call the new currency something else?
The Scottish Pound makes the most sense since that is the name we are accustomed to. There are other possibilities from history, such as the merk, noble and lyon, but ultimately it is down to our Parliament to decide.
Shouldn’t we be joining the euro?
Even if Scotland were to rejoin the EU, we need to control our own money and not have to depend on decisions made by the European Central Bank. Having your own currency is also an accession requirement and the minimum time after joining is to wait two years before adopting the euro.
In practical terms, it would be impossible to adopt the euro for at least six years after independence. That is four years for the negotiations and then two years after joining.
Joining the euro would give the European Central Bank too much control over the Scottish budget and spending powers. Look what happened to Greece.
At some point in the future, after we have repaired the damage done to our economy, perhaps after 20 years, we could revisit the issue of joining the eurozone.
How can Scotland have its own currency? Most European countries use the euro.
Several European countries do not use the euro, for example, Poland, Sweden, and Denmark. If we decide to join the EU then there is a requirement to commit to the euro in principle but only when the conditions are right.
Why don’t we just carry on using sterling?
Because then the Bank of England would control our money supply and spending abilities. We would not have any say in monetary policy (eg interest rates) and fiscal policy would be constrained (what we tax and spend).
There are also technical issues – all digital payments (which is more than 95% of total payments) use the Bank of England inter-bank settlement system. We could be disconnected from that system if the London government wanted to be difficult.
Don’t we already have Scottish currency? I’ve got a Bank of Scotland £20 note in my wallet.
That note is sterling and issued with the permission of the Bank of England. The new Scottish Central Bank will issue the new Scottish currency.
Is this anything like Bitcoin?
Absolutely not. Bitcoin does not have any state behind it and in many ways, it is not a currency and is more akin to an investment commodity. Much of the purpose of cryptocurrency is about hiding transactions from the state, which is not something we wish to promote in Scotland.
What will the Scottish Central Bank be called?
This will be for the Scottish Government to decide. Possibilities include Scottish Reserve Bank, Scottish Central Bank, or Bank of Scotland (although this would require the Scottish Government acquiring the Bank of Scotland name from Lloyds Banking Group).
I lived in South Africa where they have the SA Reserve Bank and Australia has the Reserve Bank of Australia. It is similar in New Zealand and several other countries.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
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