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Currency if Scotland becomes independent

Scotland’s independence from the rest of the UK would create a lot of change for anyone north of the border. When the Scottish people make the vote to decide whether they remain part of the UK or not, one of the considerations will be the working out the currency if Scotland becomes independent.

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Sterling

There are several options available to it if it chooses to become independent from the rest of Britain. The most obvious is to keep the pound. Whether that would work for the remaining countries in the UK is a matter for debate. Perhaps the biggest problem with doing this would be the fear that the drawbacks experienced with the Euro would be replicated with the sterling – namely that without common sovereignty over the currency, no nation would have total control of the interest rate as it would have to be centralised so the governments would be limited when they want to encourage investment and spending.

Euro

The Euro is the other obvious option for the Scottish people. It’s nowhere near as attractive as it once was but it’s a viable option. The issues Scotland would face if they continued with sterling would be replicated if they adopted the Euro and they would have to carefully manage the nation’s finances to make sure that total debt never exceeds 60% of GDP, but this is an option that will be discussed and mulled over when the time comes.

Own currency

The other option is for Scotland to adopt its own currency. As Scotland already prints its own sterling bank notes, it’s set up for the task. Perhaps this is the best option all round. Most commentators believe that the Scots will continue with sterling to begin with and then take their time deciding on the right currency for them.

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