In Scottish News #5

I read an article titled "Scottish independence: What are currency options?" in a Scottish newspaper called The Scotsman. The article can be found HERE.

This article discusses the currency options for Scotland if they were to become an independent nation. Currently, Scotland is part of the United Kingdom and uses the british pound sterling. If the referendum, in which Scotland votes to break away and become independent or remain a part of the U.K., is in favor of independence, Scotland would need to decide which currency it will use. The article outlines three main options. The first is for Scotland to adopt the euro. This would mean the European Central Bank (ECB) would determine monetary policy, such as interest rates for Scotland, and Scotland would be entitled a governing council of the ECB. Another option discussed in the article is retaining the british pound. This would have to be through agreement with the U.K., in which likely Scotland would not have much power of monetary policy concerning the pound, or through dollarisation. The final option for Scotland would be to adopt its own currency which would likely fluctuate around the british pound.

As the vote on the Scottish referendum draws closer and Scottish independence becomes a viable possibility, much though should be given to the currency of Scotland. The choice of currency would be the most important economic decision for the country. If Scotland were to adopt the euro, the exchange rate for this country would already be in place and would depend on all the countries in the eurozone. One reason Scotland considered adopting the euro early on was to express a powerful declaration of Scotland's economic independence.