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Scottish Independence - Money Worries

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So, the debate has been hotting up this week, with much discussion over what currency would be used by Scotland if we gained independence. Basically, there are three options:

1) Use the Euro. Not really a popular one, and no longer favoured even by the SNP.

2) Set up our own currency. I am not sure what such a currency would be, but apart from the inadvisability of using anything that could be called the "Pound Scots" (which was the old Scottish currency before the Act of Union in 1707 and was worth about a tenth of the equivalent English pound), it would be extremely risky to set up a new currency without the backing of a major national bank such as the Bank of England.

3) Continue to use the Pound Sterling. This is now the favoured option of the SNP, and it makes perfect sense, but it would be more of a risk for the rest of the UK, as it would rely on the good health of a foreign economy as well as the UK's itself, rather like a mini-Eurozone. Of course, such currency unions have been successful before, but examples such as the Belgium-Luxembourg one that existed prior to the adoption of the Euro in those countries, is hardly comparable, given the massive difference in the size of those economies in relation to each other, compared to the possible comparison between UK and Scottish economies. Moreover, the proposal would have to be agreed to by both sides, and I am not sure that the rest of the UK would be amenable to it after we in Scotland had effectively "cocked a snook" at them.

If we do achieve independence, then the currency union would be the best option for us, but it would also mean still having fiscal controls on our economy by the Bank of England and having to bear in mind the wishes of the UK when making decisions on the economy, taxation etc. Thus, we would still not be totally independent, and I have more faith in the current system of devolution, perhaps even strengthening that, but remaining within the UK, a setup that provides the best of both worlds, the security of being within a larger fiscal setup, whilst still having a large measure of control of our own affairs. Quite simply, the cost and risk of full independence is too high just so that we can wave a flag and say "hey look at us Scots now, we're independent".

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