HM Treasury
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Scotland analysis: Currency and monetary policy

The Government has yesterday published analysis of the currency options for an independent Scotland.

The Chancellor of the Exchequer, George Osborne, and Chief Secretary to the Treasury, Danny Alexander, will be in Glasgow to launch the second paper in the Government’s Scotland Analysis programme. Scotland analysis: Currency and monetary policy reviews how the current UK currency and monetary policy arrangements work and examines the options in the event of independence.

The analysis sets out in detail the advantages and disadvantages of the potential currency options open to an independent Scotland, including: a formal sterling currency union with the continuing United Kingdom; using sterling unilaterally, with no formal agreement; joining the euro; or introducing a new Scottish currency.

The paper concludes that none of the options under independence would serve Scotland as well as the current arrangements in the United Kingdom, which is one of the most successful monetary, fiscal and political unions in history.

All of the alternative currency arrangements would be likely to be less economically suitable for both Scotland and the rest of the United Kingdom.

Notes for Editors

  1. This is the second paper in the UK Government’s Scotland Analysis programme. The programme is examining how Scotland contributes to and benefits from being part of the UK, and how the rest of the UK benefits from its partnership with Scotland. It will provide evidence and analysis to inform the public debate on Scottish independence ahead of the referendum. The UK government will be producing a series of papers over the course of 2013 and 2014 covering key legal, economic and policy issues in the debate. The work programme was announced to the House of Commons by the Secretary of State for Scotland on 20 June 2012.
  2. The programme will look in detail at the key issues in the Scottish independence debate including:

    the legal and constitutional set-up, including the current relationship within the UK and the legal implications of a vote for independence.

    the economic questions, including the UK’s economy and public finances and Scotland’s part in that, and the shared institutions and key sectors that support the UK’s and Scotland’s economic performance.

    wider important policy issues such as the UK’s place in the world, shared defence and security services, energy, the UK’s world-leading financial services sector, welfare and pensions, and culture.
  3. This paper follows ‘Devolution and the implications of Scottish independence’, published on 11 February 2013, which concluded that, in the event of a vote for independence, Scotland would become a ‘successor state’ and would be required to create a new set of domestic and international arrangements. From a currency perspective, this means first that a new independent Scottish state would not be automatically entitled to using the Bank of England as its central bank.

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