A LEADING law professor has said that an independent Scotland would need its own currency and central bank.
Speaking on Scotonomics, Robert Hockett – a law professor at Cornell University in New York – added that it might have to “retain some kind of a loose connection to the Bank of England and to the British pound”.
Host William Thomson asked the Ivy League professor what he thought of current Scottish Government plans to leave the Bank of England in charge of all monetary policy after Scottish independence.
Thomson asked: “Scotland's independent and it wants to have a new use for currency and it wants much more state involvement.
“Could Scotland do this as an independent country whilst using the current British pound and having the central bank in England as our central bank?”
Hockett responded: “I frankly think that Scotland would have to form its own central bank and would have to have its own currency.
“It might retain some kind of a loose connection to the Bank of England and to the British pound – just for the sake of maybe not seeming too radical, too radical a severance at one time.
“But essentially what you would need is full Scottish monetary autonomy. And that, in turn, would not be compatible with the governor of the Bank of England being able to determine or call the shots.
“I think what you want is to be able to engage autonomously in what I call money modulation, on the one hand, and money allocation on the other hand.
“That means you would have to be able to determine the quantity of money in relation to the quantity of goods and services that money can command. That's the modulatory task.
“And you would have to be able to probe the direction in which the credit component of the money supply, which is virtually all of it, would flow. You couldn’t be letting the Bank of England be determining that either.
I asked Cornell Law Professor @rch371 Robert Hockett what he thought of current @scotgov plans to leave the Bank of England in charge of all monetary policy after Scottish independence? pic.twitter.com/uul6eSWnY0
— William Thomson (@Williamgallus) May 24, 2023
“So, in that sense, I think that you really can’t have a fully viable sovereign polity without having a sovereign currency that is issued and administered by a sovereign central bank.”
In October 2022, the Scottish Government laid out its plans to keep using sterling after a Yes vote until certain criteria are met allowing for the transition to a new Scottish pound.
Dr Iain Hardie, a senior lecturer at the University of Edinburgh, told The National afterwards that this was “not a good place to be” and that the majority of the Scottish Government’s criteria for setting up a new currency should be met by the point of independence anyway.
