THE CURRENCY CONUNDRUM FOR AN INDEPENDENT SCOTLAND

Ronald MacDonald

National Institute Economic Review, 2022, vol. 260, 7-25

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.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:cup:nierev:v:260:y:2022:i::p:7-25_3

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