An independent Scotland would have to establish a credible Scottish Central Bank to support a new currency in the long term, the SNP’s independence blueprint recommends.
Andrew Wilson’s Growth Commission recommends that Scotland should keep the pound for an extended transition period before moving to an independent currency when the financial infrastructure could support such a move.
That would involve setting up a Scottish Central Bank (SCB) and a Scottish Financial Authority (SFA).
The document said Scotland would not be in a formal monetary union with the rest of the UK and acknowledged that such an approach would mean the Scottish Government would not have control over interest rates.
It said that a separate Scottish economic policy would have to be “earned”once public finances were in a “fully sustainable” position.
“We then anticipate a period of between five and 10 years to put the public finances on a sustainable footing,” the 354-page document said.
It warned: “The idea that here is any quick fix or sliver bullets available is neither real nor sensible to contend.”
But it add that the prize was better economic performance and living standards and a society based on the long term choices of those who live in Scotland.
The introduction of a separate Scottish currency would be subject to six tests, which would be assessed by the Scottish Government and put to Holyrood.
They would be:
*Fiscal sustainability in relation budget deficit and debt levels.
*The Scottish Central Bank establishing international and market credibility.
*A separate currency, which met the needs of Scottish residents and businesses for stability and continuity of their financial arrangements.
*Enough foreign exchange and financial reserves to allow currency management.
*Establishing that the new arrangement better reflected Scotland’s trading or investing patterns.
*Correlation of economic and trade cycle with the rest of the UK to make an independent monetary policy feasible and desirable.