edinburgh_-_calton_hill_nov_12_0

A new report from the Adam Smith Institute, “Quids In: How sterlingization and free banking could help Scotland flourish”, was featured in BBC News and STV articles.

The report argues that an independent Scotland could have a more stable economy than the rest of the UK if adopted a policy of, what it calls, ‘adaptive sterlingization’, which combines unilateral use of the pound with financial reforms to remove government protection of established banks.

From the BBC:

The free market think tank said that dollarised economies such as Panama show that banks can do better without a central lender of last resort.

The pro-Union Better Together campaign said using the pound in the way Panama used the dollar would be “a disaster”.

Yes Scotland insisted that there would be a post-independence currency union.

But a new report, written by the research director of the Adam Smith Institute, Sam Bowman, has argued that sterlingisation – using the pound without the use of a central bank – would be “a significant improvement on Scotland’s current arrangements”.

Opponents of independence have cited the use of the US dollar by some Latin American countries as a model that Scotland should not follow, but the Adam Smith Institute claims that the economies of Panama, Ecuador and El Salvador “demonstrate that the informal use of another country’s currency can foster a healthy financial system and economy”.

The report reads: “Under sterlingisation, Scotland would lack the ability to print money and establish a central bank to act as a lender of last resort.

Read the full BBC News article here.

From STV:

A new report from the Adam Smith Institute said that “sterlingisation”, combined with reforms to banking regulations, could lead to banks taking fewer risks, reducing the likelihood of future financial crises.

Sam Bowman, research director at the free-market research body and the author of the report, said Scotland was “almost uniquely primed for such a system of ‘adaptive sterlingisation”‘.

Read the full STV article here.

The report, “Quids In: How sterlingization and free banking could help Scotland flourish”, can be read and downloaded for free here.