So will we keep the pound?
Yes, it makes sense to do so – at least in the short term. Remember the only purpose we have is to ensure that Scotland’s interests are protected. There is no requirement to be part of the UK to be able to use the pound. The Isle of Man is a perfect example of this. However we actually have three choices:
• Join the Euro? No one can force us to do so since it is enshrined in EU legislation that any country wishing to join the Euro has to join the ERM (Exchange Rate Mechanism) for three years before doing so. This is specified as being entirely voluntary. It is clearly not in Scotland’s interest to join the Euro at this time due to the uncertainties in Europe.
• Create our own currency? Perfectly possible and doable. There would be some expense involved which at this time we would not welcome. Additionally, given the strength of the Scottish economy, there is a danger that the new Scottish currency might become too strong and adversely affect our exports.
• Remain with sterling? A safe option. The pound is already our currency and we own it as much as the rest of the UK does. Being with a slightly weaker currency will help our export industry and provide reassurance to business. Whether this is considered a short term or a long term solution only time will tell. Considerable discussion would have to take place with our business community before we took a decision to leave sterling. Remember, it’s our currency as much as the rest of UK’s!
There is also confusion over the understanding on what Scotland’s relationship with the Bank of England would be. The key point is that fiscal policy would remain with the Scottish Government. That is the power to raise taxes and to decide priorities on how to spend it. The Bank of England would be responsible for monetary policy. That is the supply of money. These are clear distinctions but they are distinctions which ensure Scotland is in the driving seat over its own policies.