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THE CURRENCY CONUNDRUM FOR AN INDEPENDENT SCOTLAND
Published online by Cambridge University Press: 11 January 2023
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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- © The Author(s), 2022. Published by Cambridge University Press on behalf of National Institute Economic Review
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