SCOTTISH CURRENCY GROUP SETS OUT THEIR CRITICISM.

CURRENCY PLANS WOULD UNDERMINE STRATEGY FOR STRONGER AND FAIRER SCOTLAND

The Scottish Currency Group (SCG), representing 3,400 volunteers who support Scottish independence and have expertise in economics, finance, and public administration, has criticised the proposals on currency in the Scottish Government’s latest paper ‘A Stronger Economy with Independence’, describing them as likely to undermine the Government’s own strategy of building a stronger and fairer economy and re-joining the EU at an early date.

Commenting on the Scottish Government paper, the SCG said:

‘’We welcome many of the proposals in this paper for how independence can realise Scotland’s full potential, including its commitments to begin the establishment of a Scottish Central Bank immediately after a Yes vote and the introduction of a new Scottish currency as soon as practicable after formal independence. However, we believe the proposal to continue to use the £ sterling for an unspecified but potentially lengthy period after independence risks leaving the newly independent country in a dangerous and exposed position. It betrays a lack of ambition, seeks unreasonably to tie the hands of the post-independence Scottish Government, and is inconsistent with achieving the aims of the Government’s own wider economic strategy.  

‘During the potentially long period of using sterling, interest rates and other important aspects of monetary policy would be controlled by the Bank of England without necessary regard to Scottish interests. Any borrowing by the Scottish Government during this period would need to be in sterling, risking the creation of a high level of debt in a foreign currency. The Government paper mis-states UK foreign reserves as the current figure is US$78 billion net (HM Treasury, August 2020). Even if the UK agreed to Scotland getting a share, that would be US$6 billion. The so-called Central Bank during the Sterlingised period would have totally insufficient funds to either be a lender of last resort or to guarantee bank deposits at £85,000 per account.

‘Our own report ‘The Road to the Scottish Currency’ highlights the need for the Government of an independent Scotland to have all the levers of fiscal and monetary policy at its disposal at the earliest opportunity. It demonstrates beyond doubt that it is practicable to set up a Scottish Central Bank during the transition period following a Yes vote and to introduce a new currency within a matter of months after formal independence takes effect. Using sterling is only acceptable as a short-term contingency. The use of sterling for a prolonged period will inevitably lead to austerity and lost opportunities which will undermine achievement of the Government’s own strategy.

‘The currency proposals also betray a failure of ambition and lack of confidence in the ability of future Scottish Governments to take decisions in the best interests of the country. Responsible management of the Scottish economy after independence is vitally important. But it will not be achieved by attempting in advance to tie the hands of future Scottish Governments to criteria based on an outmoded and discredited economic orthodoxy which will inevitably close off policy options. It took Ireland nearly half a century of austerity before the straitjacket imposed by linking their currency to sterling was eventually broken, and it is imperative that we avoid a similar fate of lost opportunities in Scotland. 

‘The irony is that the Scottish Government wishes an independent Scotland to emulate the performance of other small nations but is supporting a currency plan which would tie the hands of a future Government in taking measures necessary to achieve this. It will also not be possible for an independent Scotland to apply to re-join the EU until it has its own currency.

‘For all these reasons, we strongly advise the Scottish Government to revise its position on the timing of the introduction of a new currency. The First Minister has made it clear in her foreword that the publication is not the last word on the matter and that all contributions to the debate are welcome. We believe our views are shared by the great majority of those in the Yes movement.’’

Notes for Editors 

The SCG has over 3,400 members including more than a dozen MPs and MSPs. Internal communication is mainly via Facebook. It has produced several reports containing recommendations for how currency, the Scottish financial system, banking and other financial regulations should operate in an independent Scotland. These have been widely recognised in political and business circles as useful contributions to policy development – for example, the Adam Smith Business School has recently published an article that supported our plans for currency.

The SCG report ‘The Road to the Scottish Currency’ was published on 29^th July 2022 and is available from ‘www.reservebank.scot’ (PDF attached). Details of the membership and experience of the Working Group which produced this report are included in the report.

The SCG has recently published a further ‘Q and A’ report (PDF attached) which sets out answers to frequently asked questions about how a Scottish currency could be introduced, how it would work, and what it would mean for ordinary households and businesses in Scotland – including the implications for bank accounts, mortgages, and pensions. This report has been prepared by an SCG Campaign Team chaired by Lynne Copland and is available from ‘www.reservebank.scot’. The membership of the Campaign Team is included in the report.

The Sustainable Growth Commission report ‘Scotland – the new case for optimism’, commissioned by the Scottish Government and published in May 2018, was chaired by Andrew Wilson and is available via the Scottish Government website. The SCG believes that this report has been overtaken by events, notably the terms of the subsequent Brexit deal agreed by the UK Government.

Contact Details:

Dr Tim Rideout, Convener. info@reservebank.scot

17^th October 2022

MY COMMENTS

As Westminster continues in absolute turmoil one of the great disappointments for me is the lack of preparation from the SNP to be ready for the increasing opportunities before us. The paper recently released just continued the confusion and ties Scotland to greatly weakened sterling for an indeterminate period. We are being led by political donkeys.

I am, as always

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