The British pound has stopped in its tracks ahead of the answer of Scotland to the most important question over the past several hundred years. The future of one of the world’s oldest unions will be decided at the Scottish Independence Referendum asking the residents to vote yes or no to a proposal: ‘Should Scotland be an independent country?’
The decision will be determined by the majority of votes. In case most Scots opt for independence, the governments of the UK and Scotland will begin negotiations on the details of Scotland’s separation.
Such geopolitical shifts cannot go unnoticed. Experts say that there are several most important aspects. Uncertainty about the currency arrangements is one of the thorniest issues. There is an option of creating a currency union similar to that shared by the 18-nation eurozone. But in this case, Scotland would have to take on a share of the UK national debt. Taking into account the size of the debt, many people oppose this proposal. Moreover, the Scottish Conservatives believe that the pound would restrict the country's monetary policy. The second variant suggests that Scotland could use the pound without agreement as no one can prohibit the use of freely convertible currency for payments within another country. However, no one has ever done that on a nationwide scale. The supporters of this plan offer to start using the pound without entering any union. However, in this case the government would lose the opportunity to decide on the monetary policy. Opinion poll data makes market participants nervous. There is a tight race between Scottish supporters and opponents of independence. Against this backdrop, the pound fell to its 10-month low.
