There is still an ongoing debate on whether Scotland would need its own currency immediately after independence. I am baffled by this. The answer is yes if Scotland wants to really be independent. It's as simple as that. I explain why in this video.
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How might a scottish central bank digital currency enable this transition? And what steps have been taken to explore this avenue?
Globally, there are countries rolling out CBDC’s and in doing so will experience a similar process to that of a newly independent Scotland creating it’s own currency.
I agree, an independent currency is essential. GBP and EURO are not feasible. But since the last referendum there has been significant advancements in the cryptocurrency industry, the entire landscape of fiat currency is changing, driven by current monetary policies. The opportunity for Scottish financial independence has never been more attainable.
I would like to see the discussion of Scottish independence merge with the cryptocurrency space and have experts from both in and outside of mainstream finance get pulled into the debate.
The timing is ideal for Scotland to emerge at the forefront of a global financial revolution and establish its reputation as a credible independent nation.
Crypto currency is fundamentally dangerous as it is utterly untraceable
No thank you
Crypto (and blockchain too) have many, many issues but above all are a truly pointless techno-fix for problems that never even existed in the first place.
I wonder what useless non-solution to a total non-problem they’ll propose next? Perhaps they’ll manage to persuade some dimwit at FA HQ to be part of a “global football revolution” by dishing out ‘crypto-points’ to grateful football teams instead of those rubbish old points?
Begs the question – why did a smart man like Salmond not get this and have a stronger message on the subject? Are there signs the FM/Cab Sec Finance and others understand it? Seems pretty simple and fundamental to me!
Alex regrets it, I am sure.
Do the current team get it? I don’t know. I think they have been persuaded by ‘smart money’ otherwise
[…] initiative, Common Weal who have published this paper on how to make a Scottish currency, Richard Murphy and Modern Money […]
Thanks once again for another useful resume. I think that, as you’ve touched on, the problem is still a perception amongst “conservative” folk that departing from Sterling is just too scary.
The SNP leadership haven’t a clue about how the economy actually works, as recent utterances by the Finance Secretary illustrate. The SNP leadership, of course, are effectively running household or corner shop finances so I guess don’t know any better.
Hopefully the recent advances by “outsiders” like Tim Rideout into the party hegemony will help a lot.
We need bargaining chips with the UK government. Offering to retain sterling, at least for a short while is one of those chips. Another chip is Faslane. A third is our energy surplus.
The way I see it, there are broadly two options for the UK government. One, it can cooperate with a velvet divorce which mitigates some of the UK’s losses. Or two, it can delay independence so long that even our most reasonable gradualist starts demanding the immediate eviction of the UK’s currency and nukes upon independence without allowing the UK any time to prepare itself.
Either way, the outcome is ultimately the same. By 2030, Scotland will be nuke-free and with its own currency. It’s not our time being wasted; it’s the UK government’s own time.
Currency ios not a bargaining chip on independence
It is independence
Scottish nationalism was an early forerunner of poorly thought-through populism that also bought us Farage, Trump and Brexit. They have a political lifetime to address the currency issue but its obvious why they do not want to. The irony is that with independence (sic) they prefer to become a currency user as part of the Euro rather than a currency issuer (on their own or more sensibly as part of the UK). Scotland, or more precisely, the Scottish people deserves a lot better, but they have chosen these people to represent them so share the responsibility for their own actions.
But bravo for encouraging the correct debate, better late than never…
What utter nonsense
Not in any way can Scottish nationalism be equated with populism
That is the kind/tone of response that one associates with populist supporters – I didn’t have you in that camp Richard, but thanks for the response.
If you know anything about populism – and you clearly don’t – you’d not write in the crass way you are
I guess you might be a populist though
We call them Tories around here
Is there a danger in an open economy like UK or independent Scotland persistent QE would not cause domestic inflation because such a large proportion of what we consume is imported? Let’s say we fund green investments via QE and build wind turbines built in Denmark and solar arrays built in China. This won’t cause inflation locally but how long would our trading partners want to exchange their goods for our currency or bonds. Isn’t QE a useful short-term tool in a crisis but not a way of generating wealth? Fully supportive of Scottish right to self determination BTW, but whatever route Scotland takes its got to be in a way that is mutually beneficial to trading partners.
They will have the option of demanding payment in their own currency
Problem solved
I can see how a combination of a Scottish currency and Scottish QE can resolve budgetary deficits in an independent Scotland but would be concerned that persistent trade / current account deficits would result in creditor countries losing faith in the currency this importing inflation due to rising costs of imports. This sort of question will come up and needs a prepared answer. The USA can run a CAD indefinitely but could a new currency? Ideally you should be able to demonstrate a likely positive current account, this would support your proposal.
Float the currency
Otherwise the issues are not related
Government deficit does not = trade deficit
They are different issues
“If you know anything about populism — and you clearly don’t — you’d not write in the crass way you are….I guess you might be a populist though”
An odd non-sequiter, but thanks again.
I enjoy your analysis (and agree with many of the conclusions) if not the political wrappings that go with it but will leave it alone if abuse is your chosen reposte. Good luck with educating the Scottish nationalists. Such a lovely country and its people deserve so much better.
I did not abuse
You came on here and made a crass and offensive comment
Do you expect me not to notice?
Is that how you usually start a conversation, and expect it to be ignored?
Why?
Oh, Richard, Richard, stop reacting to these people — they love it. Just blacklist them.
The trouble is that they have to out themselves first
Hopefully they will see sense in good time.
I cannot think of any country in recent times who has had an easy time if they – say – have pegged the value of their currency to a foreign produced one like the dollar.
Surely they can see that not having their currency will just lead to a form of ‘money based imperialism’ ?
Why the blind spot?
Sheesh!
Good video but I don’t understand the obsession with being able to tax and spend independently, because the Channel Islands do this whilst in a currency union. But the last two points you made on the ability to modify interest rates independently/banking system are concrete.
No you have not done this
I know a great deal about your processes and this is simply not wha5 you do
So would you call these countries semi sovereign? If I also add the examples of Gibraltar and Andorra who are in currency union, tax and raise their own debt securities but obviously have no central bank.
You should be presenting a money programme every week on TV, very informative videos.
I call them the equivalent of county councils
Of course they can borrow – but they are not currency creators
They do not have currency sovereignty
Richard, you are quite right about the need for a Scottish currency, and any problems involving public debt should be resolvable. However, although I don’t like this CityAM article, it raises a point which is dangerous to ignore, the problem of private debt
https://www.cityam.com/separatists-scots-beware-a-new-scottish-currency-would-be-catastrophic/
On any measure I can think of, private debt is far more dangerous than public debt, in England or Scotland.
If an independent Scotland had its own currency, the vast bulk of the debt its citizens inherited, would be private debt denominated in another currency.
You may have a solution, but it looks like a problem.
My personal beef is that 90% of the debate that goes on over public debt, should be over private debt.
I think this is one for Tim Rideout – who has addressed this issue
Tim – time for a guest post as well as an answer?
An interesting issue. Common Weal may also be a good source for a considered response; but in additiond may I suggest that the EU Mortgage Credit Directive provides one relevant framework for understanding of how to approach this; especially as an independent Scotland will be re-joining the EU. Just for illustration, the EU Mortgage Credit Directive is there to reduce the deleterious effects of exchange rate risk on mortgages for immovable property. It was written in response to the financial crash.