The Scottish Government has revealed it may have to “pool sovereignty” with the rest of the UK in order to set up a currency union if Scotland becomes independent but denies that Scotland would not be able to set its own taxes.
The news follows shortly after Bank of England governor Mark Carney indicated that a monetary union would require “some ceding of sovereignty”, during a visit to Edinburgh yesterday.
Carney highlighted that sharing sterling with the rest of the UK could also result in an independent Scotland losing its power to control interest and exchange rates as well as being able to set its own taxes.
Comparisons were also made by Carney to the problems that have arisen in the eurozone from not having a strong agreement surrounding its monetary union.
A spokesman for the Scottish Government has since told The Scotsman newspaper that the sharing of risk and fiscal stability would be necessary between an independent Scotland and the rest of the UK.
However the spokesman argued that this was a standard procedure for independent governments. He said: “Any independent government looks at pooling sovereignty on a range of fronts.
“This is done when it is in the country’s interests to pool sovereignty, and rules and structures are put in place.”
The spokesman also contradicted Carney’s indication that Scotland may lose power to set its own taxes. He added: “We would still be responsible for our own taxation.”
Plans for a fiscal sustainability agreement between both governments were previously outlined as part of the macroeconomic framework set out by the Scottish Government’s fiscal commission working group published back in 2013.
Concerns have also been raised over the potential negative impact of losing sovereignty on the Scottish economy following independence.
Independent MSP Margo MacDonald, formerly a member of the Scottish National Party, says “it is possible there would be too much sovereignty lost” for the Scottish Government to “build up” the economy as planned.