A monetary straitjacket: Scottish Government economic plan for independence

Primary Author or Creator:
Ben Cooper
Sceptical Scot
Alternative Published Date
Type of Resource:
Fast Facts

"The best that can be said for the Scottish Government’s new economic paper for Scottish independence, Building a New Scotland: A stronger economy…, is that it does not include some of the more hideous ideas contained within the Growth Commission report. "

More details

"Transitioning out of Sterlingisation would be no easy task.  To understand this, we first need to grasp the structural vulnerability inherent to being an independent state without monetary powers:

In part 1, I explore a recent paper on the vulnerabilities of sterlingisation to highlight what the key problems would be.

In Part 2, I look at how transition to a Scottish currency on the basis proposed in this paper would be extremely difficult.

In Part 3, I briefly examine the case of dollarised Ecuador, and how an attempt to escape dollarisation in that Latin American nation never got off the ground.

Finally, in Part 4, I look at what the disastrous UK Government ‘mini-budget’ should and shouldn’t teach us about monetary policy, fiscal policy and financial markets."

"The Scottish independence movement – the vast majority of whom back a Scottish currency – should continue to loudly make that case and apply pressure on the Scottish Government until it sees sense. A Scottish currency is no guarantee that independence would see the country’s deeply embedded economic problems tackled. A monetarily sovereign independent government would still be perfectly capable of chronic mismanagement. But to have an independent country with a fighting chance of making even partial economic and social progress, monetary sovereignty is a pre-requisite. Another Scotland is still possible."