I have been asked a number of times about ‘the currency issue’ when Scotland is an independent country.
There is no country in the world that does not use at least one currency. A currency provides a means of exchange and an internationally recognisable means to trade. It is underpinned by a financial infrastructure, aimed at securing stability. There are many currency arrangements in operation across the world.
Let us quash the first big myth. There is nothing (and nobody) to stop us using the pound; it being a fully convertible currency.
In many countries across the globe the pound can be used without any agreement from the UK being necessary. Anyone that tries to tell you otherwise is, quite simply, telling you fibs! Ireland, for example, used the pound for 56 years after gaining independence.
What was discussed during the independence referendum of 2014 was setting up a currency union with the rest of the UK. The UK Government at that time claimed they would not wish to do this – but have subsequently conceded that this was simply them playing politics.
The Sustainable Growth Commission published in 2018 advised using the pound but without a currency union until such time as it makes economic sense to launch our own currency. I am happy to leave the precise timing to the judgment of an independent Scottish Government as we can’t know in advance what will be happening globally at the point of independence.
Many businesses in Scotland already operate in parallel currencies and have accounts in other currencies such as US dollar and the Euro as part of their international trading strategy.
For each option there are considerations; for example, at the point of independence it makes sense to continue contracts such as pensions and mortgages in pounds sterling. Mortgage-holders and issuers, and pensioners will look for stability and certainty at the point of transition.
Fundamentally, you use the currency(s) that suits your needs the best.
Finally, the question of currency has not been vexed over by the multitude of other countries that have become independent. It is but one of the areas that will need to be considered – and by no means the only one. We have already started thinking about transition plans to ensure we are well prepared to provide the Scottish people the strongest possible financial and economic infrastructure to enable the best future choices to be made.