There are growing signs Scottish First Minister Alex Salmond is shifting ground on keeping the pound if Scotland votes for independence. After his plan to negotiate a formal currency union was shot down by all three main British parties, he is now hinting that Scotland could unilaterally adopt the Pound regardless.
This approach has been dubbed the “Panama plan” by critics, in reference to the central American nation’s unilateral use of the US dollar.
Salmond told the BBC’s Today Programme on Monday morning that the currency debate was “not a question of keeping the pound”, and added that it was simply a question of whether there would be an “agreed currency union.”
Later, a Scottish Government spokesperson added, “It is a simple fact that sterling is an internationally tradeable currency – the pound is as much Scotland’s as the rest of the UK’s and there is nothing that George Osborne or anyone else can do to stop us using it.”
Analysts have warned that keeping the pound without a formal agreement with the remainder of the UK could spell economic disaster for Scotland. It would have no central bank and lose the Bank of England as its lender of last resort, meaning it could potentially lose all control of monetary policy.
Interest rates would be set by a foreign nation, and banks could choose the leave the country due to the lack of financial security.
Due to their desire to eventually join the European Union, the Scottish National Party have been reluctant to advocate creating a new currency for Scotland. The EU requires that each new member eventually adopts the Euro.