This debate is about Scotland’s control of its economic policy. If we use Sterling, our monetary policy will all be set in London.

“The fact is that, if we use sterling, our monetary policy - so that’s the interest rate, the exchange rate, the money supply and the inflation rate - will all be set in London and our scope for fiscal policy - so what we tax and spend - will be limited. Worse, there will be no lender of last resort in Scotland and no viable insurance of bank deposits. Paying out the Scottish depositors of even a small bank like the Clydesdale would cost £30 billion in currency we do not have which would be about half the revenues of the Scottish Government for a year,” he said. 

“The result is clear. We would not have real independence, we would have risk and EU rules mean that, without your own currency, you can’t rejoin the EU.” 

“Our own currency, I would agree, does not guarantee economic success, I would never say that it did. However, getting your currency wrong and using sterling with no control over it and no control over your economic policy has the potential to completely sabotage the foundation of the new country or a re-established country such as Scotland. 

“If we are 'sterlingised', for example for 5 years and there is any financial crisis, we’ll be unable to do anything about it. We’ll be grovelling to the Bank of England asking for a bailout to which they will delight in saying No."  Dr Rideout then proposed the following seven tests which he argues make far more sense and are more practicable:

Test 1: Is the Bill to establish a Scottish Reserve Bank drafted and ready? 

Test 2: Will new notes and coins be ready in time? 

Test 3: Have we designed, implemented and tested a new Scottish Bank payment system? 

Test 4: Have we designed / executed a Public Information Campaign?

Test 5: Are the premises, staff, infrastructure, etc., for the Scottish Reserve Bank in place? 

Test 6: Have we identified and developed a plan for the financial regulation that will be needed for our financial institutions, etc? 

Test 7: Has a (sterling) Pensioner Guarantee been set up? 

On these tests, argues Dr Rideout, a Bill to establish a Scottish Reserve Bank should be started before any Independence vote. 

“It takes time to design your notes and make sure you’ve got all the security features and all the rest of it place, that they’re suitable for colour blind people, then you have to give it to a company like De La Rue who will then spend 6 months or more manufacturing them. It took a year for the Royal Mint to make the new £1 coins. 

“Have we designed, implemented and tested a new Scottish bank payment system? Well, at the moment, when you make an instant payment or you go to a cash machine or whatever, that’s going through the UK bank payment system. We can’t carry on using a Sterling payment system if we’re going to have our own currency, so we need to set up our own which is not difficult because there’s a template ready existing. It's the software and algorithms which were designed for the European standard payment system. All UK banks already comply with the standard, so all we have to do is copy that, set it up and set it to do transfers in the new Scottish currency. 

"Have we designed and executed a public information campaign? It's very important as you don’t just impose something like this on people; you have to take everyone with you during this process. 

“Are the premises, staff, infrastructure, etc., for the new Scottish bank in place?The Irish Central bank has about 1,000 employees, that’s the sort of order of magnitude you have to be thinking about. Of course, they don’t all have to be there from day 1, but you have to have your computer systems in place. 

“Have we identified and developed a plan for the financial regulation that’ll be needed? We obviously do not want to just cut and paste the regulation - or lack of regulation - the UK has at the moment, so we need to have something that is going to work and control Scottish banks and financial institutions much more tightly and actually ensure that they do what we want, rather than what the bankers want. 

"Has a Sterling Pensioner Guarantee been set up? One of the big concerns people have is they are worried that their UK state pension or their private pension might be affected if the Scottish £ suddenly plummets or increases in value - their pension is going to be affected. 

“My proposal is that we have a Pensioner Guarantee which is that anyone in receipt of a sterling pension would receive the higher of either the sterling amount or the 1 to 1 equivalent Scottish £ amount. So if the Scottish £ goes down, you're quids in because sterling’s worth more and your pension’s gone up. 

“I don’t think it’s very likely the Scottish £ will go down, but anyone with a fixed income in sterling would gain. If, which is more likely, the new currency increases in value against sterling and you were left on your own, you would lose out because sterling is worth less; the Scottish Government would step in and make it up to the same as it would have been if we had not had the new currency. 

“So if sterling went down to 90p, you’d get 10p from the Scottish Government to bring it back up to what it would otherwise have been. 

“I think that these are the sort of tests we should be looking at and that should actually be implemented as they are much more practicable and address some of the concerns that people have,” concluded Dr Rideout.