By Martin Kelly
An independent Scotland can use the pound and will be able to flourish without a formal agreement with Westminster, according to one of the world’s leading think tanks.
The Research Director of the Adam Smith Institute, Sam Bowman, has said that “the UK’s obstinacy would be Scotland’s opportunity.” adding that the pound should remain Scotland’s currency and simply be pegged to Sterling should London block an agreement.
Commenting on the issue of currency, Mr Bowman, said:
“An independent Scotland could flourish either by using the pound sterling without the permission of the rUK or by setting up a ‘ScotPound’ pegged to sterling through a currency board, which would achieve a similar end.”
Citing as examples several countries that use the US Dollar without official agreement with the US Government, Mr Bowman added that a newly independent Scotland would be bound to act in a more fiscally cautious fashion:
“Because Scottish banks would not have access to a currency-printing lender of last resort, they would have to make their own provisions for illiquidity, and would necessarily act more prudently.
“Scotland actually had this system of ‘free banking’ during the 18th and 19th centuries, during which time its economy boomed relative to England’s and its banks were remarkably secure. And Panama, which uses the US Dollar in this way, has the seventh most stable financial system in the world.”
The intervention followed Tuesday night’s TV debate which saw First Minister Alex Salmond take on Better Together head Alistair Darling.
In the exchange the leader of the No campaign focused on the issue of currency, repeatedly demanding a Plan B from Mr Salmond. However the First Minister refused to be drawn on possible blocking moves by London and insisted a currency agreement would be in the interests of both Scotland and the rUK.
Mr Bowman added: “Everyone says Mr Salmond needs a Plan B if the rUK does not agree to a currency union with Scotland. But unilateral adoption should be Plan A, making Scotland’s economy more stable and secure. The UK’s obstinacy would be Scotland’s opportunity.”
The Adam Smith Institute is an independent, non-profit and non-partisan organisation based in London and is one of the world’s leading think tanks.
The issue has dominated the pro-Union media with most outlets claiming Mr Darling had beaten the First Minister. However polling carried out after the debate has suggested that Mr Salmond was the clear winner amongst the vital ‘undecided’ group of voters.