Launching a new currency in the modern digital age is complex – it is a process with a lot of moving parts – but it is not impossibly difficult.
This paper lays out a three year timetable starting from shortly after a Scottish independence referendum and culminating in the launch of a new currency on Independence Day.
The blueprint is informed by existing precedents including the launch of the euro and comprises the most detailed and authoritative paper yet produced on how to introduce a Scottish currency in the event of independence.
― A three year transition period after independence will be necessary to introduce a new Scottish Currency. An electronic currency will be introduced first, pegged 1:1 with Sterling over the whole of the transition, before introducing a physical Scottish Currency near the end of the transition period.
― Allow individuals to convert bank accounts from Sterling to Scottish Pound across the transition period. Agreement shall be sought so that cross currency transaction costs shall not be charged during the transition period.
― A domestic and international payment infrastructure will need to be established. There is the potential to establish a Scottish Government owned centralised system for this.
― It will take just two years for the Scottish Central Bank to be turning a profit through seigniorage, based on an initial investment of £50m in starting up the currency.
― An equivalence between the new Scottish Currency and Sterling over the transition period will ensure prices initially stay the same.
― Existing contracts and mortgages will be able to continue on their existing terms but it will also be possible to convert or redenominate these to the new Scottish currency. The Scottish government should set up systems to aid these conversions.
― The payment of taxes and the receiving of welfare payments should be introduced as early as possible into the life of the new currency.
― The Scottish Government would have to decide to whether to redenominate the debt into the new Scottish Currency or alternatively keep the debt in Sterling and make the repayments in Sterling.
― At the start of the transition period, a working group would oversee the introduction of the new Scottish Currency, before a Scottish Central Bank takes over when the physical currency is introduced.