 An Independent Scotland’s Currency Options Redux: Assessing the Costs and Benefits of Currency ChoiceNo 4952, CESifo Working Paper Series from CESifo Abstract: This paper demonstrates that all of the currency options available to an independent Scotland come with the price tag of an austerity programme to the tune of £40bn. This is due to the need to accumulate foreign exchange reserves. So called Plan A – being part of a formal monetary union – comes with the added price tag of a 7% loss of competitiveness on average per annum. There will also be considerable volatility of competitiveness, similar to a separate currency. A formal sterling currency will end with a speculative attack and currency crisis which would costs Scotland alone anything in the region of £30bn to £200bn. The only currency option that maximizes the benefits and minimizes the costs of independence is that of a separate currency. All of the other options have none of the benefits but even greater costs than the separate currency option. However, this would also be a costly option in terms of the costs of redenomination and the need to build up an adequate stock of foreign exchange reserves. Keywords: Currency Regimes; Economics of Scottish independence (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4952 Access Statistics for this paper More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC. |
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