UK Think Tank Says Scotland Could Use Pound Without Permission

An independent Scotland that carried on using the pound without the permission of the rest of the UK would have a stronger economy than it does now, a free-market thinktank said on Thursday.

The Adam Smith Institute said the country would not only survive but thrive outside of a formal currency union provided there were changes to the banking system to inject competition and reduce risk-taking.

Adding to the political debate between the yes and no camps about the currency regime for a post-independent Scotland, the ASI said the nationalist leader Alex Salmond should follow the example of Panama, which uses the US dollar as its currency and does not have its own central bank.

Sam Bowman, the ASI’s research director, said Scotland should adopt a two-pronged approach – unilateral use of the pound together with the removal of protections for banks that allow them to engage in risky behaviour without suffering the consequences.

He added that the thinktank’s proposal for “adaptive sterlingisation” would allow Scottish commercial banks to issue promissory notes in unlimited quantities provided they were backed by reserves of pounds, dollars, gold, or even cryptocurrencies such as Bitcoin. The report, called Quids In, said this approach chimed with Scotland’s own banking history in the 18th and 19th centuries.

The currency question has been at the heart of the independence debate. The yes camp has said it would continue using the pound after independence while the no side has said Scotland will not be allowed to remain part of a currency union.

via The Guardian

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.