Currency remains a thorny issue for Scottish independence supporters, with the SNP yet to provide a clear plan for what money an independent Scotland would use. The debate, which dominated the 2014 referendum campaign, has resurfaced as First Minister John Swinney pushes for a second independence vote.
Historic Currency Disputes
In 2014, then-First Minister Alex Salmond advocated for a formal currency union with the UK, insisting Scots would keep the pound sterling and have a say in monetary policy. However, then-Chancellor George Osborne rejected the idea outright, stating independence would mean Scotland "walking out of the UK pound." Salmond later proposed "sterlingisation," where Scotland would use the pound unilaterally, similar to smaller nations using the US dollar. This idea faced internal opposition from figures like Jim Sillars, who argued for a new Scottish currency pegged to sterling.
Current SNP Position
The SNP's 2022 white paper proposed continuing to use the pound sterling for an unspecified period after independence before transitioning to a Scottish pound. The document stated: "We propose that, on independence, Scotland would continue to use the pound sterling for a period before moving to our policy of adopting a Scottish pound. The change would take place as soon as practicable through a careful, managed and responsible transition, guided by criteria and economic conditions rather than a fixed timetable." Critics note this leaves key questions unanswered, including how long the transition would last and whether Scotland would truly be independent while the Bank of England sets monetary policy.
Economic Challenges
The Economics Observatory highlighted risks: "The continued use of sterling post-independence – either under a monetary union or sterlingisation – would require a strict macroeconomic regime be put in place. This would demand short-term adjustments to Scotland’s fiscal and balance of payments position." It warned that sterlingisation could lead to draining sterling reserves and deflationary pressures.
EU Membership and the Euro
The SNP also aims for swift EU membership, which legally requires joining the euro. However, Sweden's precedent of opting out suggests Scotland might negotiate an exemption. Former SNP MEP Alyn Smith noted: "There is a commitment to participate in economic and monetary union, yes, but there is no timescale attached to that." He suggested a referendum on euro membership would be necessary.
Unanswered Questions
With at least three currency options—the pound, a Scottish pound, or the euro—independence supporters demand clarity. Chris McCall, Deputy Political Editor, argues: "If the SNP is serious about staging an IndyRef2 in the coming years, it must offer a clear answer on the way forward."
