The British Government has closed its door to a formal agreement with the Scottish Government for its continued use of the Pound if the country votes to be independent in the next year. The British Government cited the tumult of the 17-nation Euro region during the debt crisis as reason. According to a study completed by the Treasury in London, unless a political union is created, an official currency union between Scotland and rest of the United Kingdom is not likely to work in a good manner.
According to George Osborne, who is the UK Chancellor of the Exchequer, if the present arrangements are abandoned, that would turn out to be a deep and dark drive into the unchartered waters. Incidentally, Osborne is currently in Glasgow, where he along with the Chief Secretary to the Treasury, Danny Alexander, is working on creating the case for Scotland keeping the status quo.
Incidentally, not only the ruling Conservative Party, but the coalition partner Liberal Democrats, along with the main opposition Labour Party – all are in favor of preserving the UK, which was formed in 1707, through the Act of Union. On the other hand, the Scottish National Party, which runs the semi-autonomous Government in Edinburgh, is currently campaigning for independence and it wants to set a referendum for 18th September, 2014.
According to the Scottish Secretary in the UK Cabinet, Michael Moore, currency is pretty fundamental aspect. He added that people care about the pound you have in your pocket and hence, understanding the issues with currency is something there is a real appetite about and a lot of people ask about it.
According to the report published by the Treasury, if these two countries enter into a Sterling union, this will result into a fundamental asymmetry in the degree of exposure to the fiscal and financial risk between both independent Scotland and the rest of UK as well. Incidentally, due to the increasing losses, in 2008, Royal Bank of Scotland Group Plc. was bailed out by the UK Government. Edinburgh is home to the bank.
The Scottish Government feels that a shared currency union will be the best option for not only Scotland, but rest of UK as well. It responded to Fiscal Commission report (It came out earlier in this year) which stated that Scotland should keep the British currency.