An independent Scotland would have more control over its finances with a separate Scottish pound rather than retaining sterling in a currency union with the remainder of the UK, according to banking experts.
A separate currency would be politically unpopular, particularly given the economic crisis, but it may not be the high-risk proposition some have suggested, Scottish law firm Tods Murray said.
Banking team partners Rod MacLeod and Hamish Patrick wrote: “Whilst some would view issuing a new currency as a high-risk alternative due to the inevitable uncertainty over the new currency’s exchange value on the international money markets, if Scotland issued its own currency it would at least guarantee a greater degree of fiscal autonomy than under the other options.
“An independent Scotland’s size and reduced economic power on the international stage (when compared to the rest of the UK) would not necessarily preclude a successful currency in the long run if one looks at nation states such as Switzerland or Singapore.
“However, on balance, it appears unlikely that the Scottish pound would be a popular option in Scotland in the short term as market confidence in any new currency is likely to be affected by the ongoing global economic crisis.”
They added: “If an independent Scotland keeps the pound, there needs to be an appreciation that, at best, Scotland will have limited control over monetary policy as the junior partner in any currency union or even less influence if a currency pact is rejected.”