Introduction
In determining a new economic path for Scotland as an independent nation, deciding upon the appropriate monetary system will be one of its most significant policy choices. For a small open economy such as Scotland, the decision on what form of currency regime to use and how it would be institutionalized will significantly affect its economic performance and stability. Although there are several choices available, from maintaining the British pound to using euro to implementing a new Scottish currency one idea that warrants further examination is issuing Central Bank Digital Currency known as CBDC. A Scottish CBDC would come with some advantages such as improved transaction efficiency, financial inclusion and policy freedom while still anchoring inflation expectations. But there are also risks and uncertainties associated with a CBDC’s possible impact on the wider financial system that would have to be considered. A thorough analysis of the opportunities and difficulties on a Scottish CBDC would be insightful in determining possibly what might constitute an ideal form when creating a new monetary system for independent Scotland.
The New Pound Scots (NPS)
Considering that in the near future Scotland may be completely independent and Currency Separation Day is planned for January 1, The New Pounds Scots CBDC proposal aims to develop a fully digital Central Bank Digital Currency. The idea is to create a real cashless currency with no notes or coins in circulation. Scotland’s success lies in the assumption of a seamless process to its long awaited independence, harmonious relations with UK regarding borders and mutually beneficial trade deals from other nations as it supports economic stability. The primary scheme revolves around laying out strong pillars on digital wallet system for all citizens within the spectacular Scottish landscape. Proper collaborations with technology providers are the sure way of ensuring that we have interfaces in our systems which can be user-friendly and usable on variety of devices. The implementation of biometric authentication increases the level of security, encouraging trust in the digital space. NSP adoption would require a comprehensive payment ecosystem. The priority will be seamless integration with retail and online businesses, offering incentives to merchants anymore consumers such as reduced transaction fees or loyalty programs. The aim is to establish NSP as choice number one for transactions. Financial Inclusion Initiatives cater to every demographic, including the unbanked and under banked. Educational programs will make the society more inclusive and informed through promotion of financial literacy as well as proper usage. NSP will be governed by the authority of Scottish Reserve Bank which is going to play a central role
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