The U.K. government's stance that a currency union would not be an option between an independent Scotland and the rest of the U.K. “is not bluff, it is not bluster, and it is certainly not bullying,” according to Danny Alexander, chief secretary to the Treasury.
“It is just a simple statement of fact.”
Mr. Alexander was speaking March 9 at the annual National Association of Pension Funds investment conference, held in Edinburgh, about a September referendum that will decide whether Scotland should be independent from the rest of the U.K.
“The currency question is probably the biggest independence question of all,” he said. “We made absolutely clear last month that if Scottish people vote for independence there will not be a currency union between Scotland and the U.K. It wouldn't work.”
Mr. Alexander took delegates through three further options for an independent Scotland. Joining the euro “is no more attractive an option than a sterling currency union.” A new currency — a Scottish pound — would be costly and require a new central bank and financial sector regulator.
The final option — “sterlingization,” allowing the British pound to circulate without a currency union — “would see Scotland take the same economic approach as such financial powerhouses as Panama and Montenegro.”