In a report detailing the economics of independence, the Scottish government proposed keeping the pound sterling as its currency for several years of 'transition.' After the transition, the report states that it would create a new currency for an independent Scotland. Unfortunately, both of these proposals are foils to the very idea of independence. If Scotland retains the pound as its currency, it will lose all input on monetary policy. As it stands, Scotland's seats in Westminster allow for the nation to have a voice regarding the UK's fiscal concerns. In the case of independence, they lose that voice. They would have no say on the monetary decisions of the currency that they will rely upon in the formative years of a young country. Even assuming that the transition period would not yield any troubles for Scotland fails to address the hurdles of creating a new currency. As evidenced by every country or bloc that has attempted to do the same, navigating a new currency can often be hairy. Low value, a lack of trust, and the logistics of transferring systems and institutions over from the pound only spell more uncertainty and risk for Scotland. The economic uncertainty that would follow independence, coupled with Scotland's already present financial issues, means that the young country would be vulnerable to economic strain. Among other hurdles, the economics of independence does nothing to support its case.
Scotland's institutions rely on the pound and, therefore, will need to retain it as the national currency. Luckily, the rest of the UK is also reliant on Scotland's participation and will be hard-pressed to maintain a financial relationship with the nation in the case of independence. Such a union would allow Scotland to create its unique fiscal policies while also keeping the pound as its form of money. Not only is this necessary for the success of an independent Scotland, but also to maintain essential relationships with their British neighbors. First Minister Nicola Sturgeon has also indicated that she would not drop the pound for the euro in the case of Scottish ascension into the European Union. And the UK would be smart to keep this relationship going, as creating any additional financial hurdles with an independent Scotland would risk the stability of both economies.
[P1] An independent Scotland would lose its voice on monetary policy with the pound. [P2] Creating a new currency is challenging and a risky endeavor. [C] The financial hurdles caused by independence make it a risky bet for Scotland to take.
Rejecting the premises
[Rejecting P1] Scotland can negotiate a currency union with the UK after becoming independent. [Rejecting P2] Scotland may completely avoid needing, or wanting, to create a new currency and adopt the Euro.