B&E This Month

Scotland: New country.What currency?

There is much discussion doing the rounds regarding what Scotland will be as an independent economy. The union with England could come to an end this year. There are questions being raised - how the shared oil and gas reserves and revenues will be shared, how the combined debt would be divided, etc. But what has become the prime question is: what will be Scotland’s new currency if the divorce actually happens? Voices in the English camp refuse to allow the Scots to walk away with both independence and Pound on the same platter. Even if the Scots were allowed to keep the Pound, the new state would have little control over monetary policy or its exchange rate. That isn’t a likely healthy situation. So, could Scotland become a part of the Eurozone? Again, sounds improbable given the recent crisis and a separate warning by the European Commission (to disallow an independent Scotland to join the EU). The last (easiest?) option is to establish its own new currency. But high interest rates and strict monetary control would mean a slow-to-dead growth for the new country. Undesirable.