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THE CURRENCY CONUNDRUM FOR AN INDEPENDENT SCOTLAND

Published online by Cambridge University Press:  11 January 2023

Ronald MacDonald
Ronald MacDonald*
Affiliation:
Adam Smith Business School, University of Glasgow, Glasgow, United Kingdom
*
*Corresponding author. Email: ronald.macdonald@glasgow.ac.uk
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Abstract

In this paper we revisit the issue of currency regime choice for an independent Scotland using an international macroeconomic/ finance framework. Specifically, we consider the main competing proposals for currency choice with an emphasis on the SNP’s official policy of the informal use of sterling post-independence. We conclude that from a macroeconomic perspective this option is unlikley to be credible to international capital markets. The option that would be credible, and avoids the austerity associated with the choice of a fixed exchange rate option, would be a free float at least during the transition period of independence.

Keywords

Scottish independencecurrency regimeE44E52F31F45
Type
Scotland
Information
National Institute Economic Review , Volume 260: THE POLITICAL ECONOMY OF DEVOLUTION IN, AND SECESSION FROM, THE UK – PART ONE , Spring 2022 , pp. 7 - 25
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of National Institute Economic Review

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