The Story of the Economics of Independence – Part 3

“It’s 9pm and you are watching the Scottish Broadcasting Corporation. Please stay tuned for an important public information announcement from the Governor of the Scottish Reserve Bank”, said the announcer. The screen faded to a picture of the SRB HQ in the old Royal High School on Calton Hill with the Governor seated in from of it.

“Fellow Citizens, I last updated you in November shortly before our St. Andrews Night Independence Day. As you know we are now in the penultimate stage of the launch of our new Scottish Pound currency. We are very pleased to report that over 1.5 million of you bought a £90 familiarisation pack of one each of the new notes and coins when those went on sale two weeks ago. Hopefully that means most of you know what to expect when those new notes and coins go into full circulation on Monday next week. We can also tell you that so far 98% of business bank account holders have asked their banks to open S£ business accounts for them. On the personal front take up is lower but still a very pleasing 84% of account holders. As you all know there is no compulsion and anyone who wants to keep a sterling account and retain some or all of their savings in sterling can do so. Those sterling accounts were all successfully transferred to the rUK part of your bank on schedule late last November, so will remain regulated and guaranteed by the Bank of England .

“This coming weekend is the culmination of nearly four years hard work that started back in June 2021. We estimate there is about £194 billion that we own. So far your banks have asked us to issue them with S£48 billion to meet your initial requests for exchanging your sterling. That money will be delivered to them tomorrow morning and over the weekend it will reach your new bank accounts. Don’t forget that you are paying for your new Scottish currency with the matching amount of sterling. Therefore your bank will also be deducting that sterling from your old account. Different banks have different schedules and the timings are phased over the weekend. Please watch out for a text or email from your bank to notify you when your exchange has completed. In most cases you will be able to use your new account and cards right away. If you have not asked to keep some sterling or have asked for your old sterling account to be closed then please remember – you won’t be able to make payments from your old account after the switch. If you are one of the 16% that has opted not to have a S£ account then nothing changes and you can take no notice of what is happening in the next few days. We expect another £27 billion or so to be exchanged over the next eight-week period when we at the SRB are keeping the rate fixed at £1 sterling equals 1 S£. Do take advantage of this period to make any exchanges you want to do (and I realise many of you are waiting to check that everything goes as planned before taking the plunge). Once it ends the S£ will float so the rate against sterling will start to change. Your bank will also start to apply their usual foreign exchange fees, for example if you use your sterling debit card for a purchase.

“We know about half of the 900,000 of you that have a mortgage have already started the re- mortgage process with your provider that is necessary to switch to an S£ mortgage and pay off your current sterling one. The banks have told us they expect everyone that has already started that process will be able to complete the re-mortgage within the eight-week no fees and charges period. If you haven’t started the process do please ask your bank now and refer to their web site for further details. You can also see our advice and detailed guides at www.reservebank.scot. You can naturally keep your mortgage in sterling, but we don’t recommend that unless you understand and are happy with the additional risks that entails.

“Those of you working in the Public Sector will have heard this from your employer directly many times, but do remember that any wages, pensions, expenses or other monies due to you after 1st February will be paid in our new currency. This also applies to recipients of the Scottish Universal State Pension. Government is confident that almost all those people have arranged to have an S£ bank account. If, though, you are one of the few that has not then you need to contact your bank now as a matter of urgency. Payments will be delayed if there isn’t a Scottish account to receive the money. Suppliers to the public sector should also be well prepared by now as a result of the six- month awareness campaign by procurement departments.

“Finally remember that from Monday morning Sterling will cease to be the currency of Scotland and will be replaced by our own Scottish Pound. Sterling will, though, be accepted in shops, restaurants and so forth at least until the end of our eight-week exchange period. After that it is up to the proprietors. There will be charges on sterling card payments once the exchange period ends. Vending machines, though, probably won’t accept sterling notes and coins once they are converted to the S£, so make sure you have whatever S£ you may need for parking meters and the like after Monday.

“In many ways our job in the Scottish Government, for us at the SRB, is just beginning a new chapter. With our currency finally in place we will have the control levers we have been lacking until now to be able to have the spending and taxation, interest rates, etc that work for Scotland. That means being able to increase our prosperity, minimise poverty and unemployment, and ultimately turn our country into a prosperous, sustainable, green Northern European state in which all of us participate.

“Please join all of us in the Scottish Reserve Bank in taking great pride in our national Scottish Pound. I can’t wait to start using the notes on my trips to see other central banks. Finally, nobody will be getting them mixed up with the Bank of England! The designs featuring maps of our islands and our iconic wildlife are stunning, too.

“Thank you for your attention, and Good Night.“