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The Currency Conundrum For An Independent Scotland

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  • MacDonald, Ronald

Abstract

In this paper we revisit the issue of currency regime choice for an independent Scotland using an international macroeconomic/ finance framework. Specifically, we consider the main competing proposals for currency choice with an emphasis on the SNP’s official policy of the informal use of sterling post-independence. We conclude that from a macroeconomic perspective this option is unlikley to be credible to international capital markets. The option that would be credible, and avoids the austerity associated with the choice of a fixed exchange rate option, would be a free float at least during the transition period of independence.

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  • MacDonald, Ronald, 2022. "The Currency Conundrum For An Independent Scotland," National Institute Economic Review, National Institute of Economic and Social Research, vol. 260, pages 7-25, May.
    • Handle: RePEc:cup:nierev:v:260:y:2022:i::p:7-25_3
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