New white paper report provides in-depth discussion of an independent Scottish currency following Scottish independence
SOME commentators have claimed that the Yes campaign in the 2014 Scottish independence referendum failed to arrive at a satisfactory position on what currency Scotland would use after independence, and that this was a major blow to the campaign.
The Yes campaign was divided on the question of currency. The Scottish Green Party and some leftwing campaigns and activists advocating an independent currency over keeping Scotland within a ‘Sterling zone’ – the main policy put forward by the Yes campaign – on the grounds that an separate currency would give an independent Scottish Government fuller control over economic decisions.
But how difficult would it be to set up an independent currency, and what would that involve?
As part of the Common Weal think tank White Paper project, looking in-depth at the various policy problems thrown-up by the possibility of a second independence referendum, financial expert Peter Ryan has produced a thorough guide to the establishment of an independent currency.
Below, in condensed form, CommonSpace looks at the three steps advocated in detail by Ryan in the report.
1. Electronic currency
The path to an independent Scottish currency, according to Ryan, is the establishment of an electronic version at the beginning of a three year transition period, at the end of which a new physical currency would replace the Sterling in circulation.
To ease in the transition, private bank accounts could be converted into the electronic currency.
2. Equality with Sterling in the transition period
The electronic currency would be pinned at 1:1 with Sterling for duration of the transition period. The tying of the value of the new electronic currency to the pound would help maintain prices.
The Scottish Government would be free to maintain the existing benefits and tax systems during the transition and to choose whether to deal with its successor debts from the UK in either Sterling or the new currency.
The new currency would require a national and international infrastructure to administer it.
At the beginning of the transition period the electronic currency would be administered by a working group, which would pass over authority to a Scottish central bank with the introduction of the hard currency.
A domestic and international payment infrastructure would also have to be put in place, and this could be done by a Scottish Government owned centralised system.
The Scottish Independence Convention, to be held on 14 February in Glasgow’s Radisson Blu Hotel, will discuss many of the practical implications of a second independence referendum, including campaigning strategy and the policy basis for a newly independent country.
Picture courtesy of Common Weal
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