THE Scottish Currency Group, in its first column in The National on March 8, listed three important conditions which need to be met in order for Scotland to make a successful transition to a properly independent and democratic country.

  • Set up a central bank and implement our own currency without delay after independence
  • Design a banking and financial system that will deliver the priorities which the Scottish people choose
  • Adopt a democratic written constitution which sets out clearly the rights of all citizens and how a democratically elected government will be accountable to the people.

    Since then, some SCG members and Modern Money Scotland have established a new group, the Scottish Banking & Finance Group.

This is not a rival to either the SCG or MMS but a sister group with the purpose of broadening the debate within the independence movement to consideration of the design of a new banking and financial system for Scotland that will meet the needs of the people and provide capital to help finance the post-independence economy and build the sort of society we choose for ourselves as a nation.

In The National on March 6, Believe in Scotland set out a vision of what an independent Scotland could look like and what our priorities could be. The Scottish Banking & Finance Group (SBFG) supports these ambitions.

The independence vision will also benefit from the fantastic work done by Common Weal with its proposals for “Our Common Home Plan” – a comprehensive description of what we need to do to make the transition to a green economy and way of life.

Delivering the ambitions proposed by Believe in Scotland and by Common Weal will require the three conditions, set out by the SCG and SBFG, to be met.

Scotland will not be able to achieve what the people want unless there is public control over public money. Banking must be subject to democratic control and that requires the financial sector to be answerable to the people through our Parliament and robust processes of democratic accountability.

The banking system requires a central bank to stand at the heart of a banking network which includes a National Investment Bank and a framework which engenders the emergence of regional and local banks and mutual financial institutions (such as credit unions). Subsidiaries such as an Energy Bank and Agriculture Bank, for example, would have the sole purpose of providing capital to support the development of domestic energy and food productive capacity.

The National: Proposals for currency and debt reduction in the Growth Commission report have caused disquiet

READ MORE: Why we'd need a Scottish currency without delay to truly gain independence

Our pension funds must also be harnessed to provide capital for domestic enterprises and infrastructure. Our public-sector pension funds get their funding from public money – government spending is the source of all public-sector pension contributions.

THIS means such public-sector pension funds should have obligations to the wider public as well as their members. Pension funds must be directed towards the provision of capital for productive activity and not for financial speculation, which produces only an illusion of wealth.

Real wealth is based on the things we produce, which are useful and which satisfy our real needs – including the over-riding need to live in harmony with nature. This can be done without undermining pension scheme members’ pension rights.

In fact, the value of our currency is entirely dependent upon the value (usefulness) of what we produce. Money provided for production of the things we need creates the conditions for its own value. A government with its own currency can create all the public money that our economy requires – but trust in our currency can only be built upon the knowledge that it is being used to create useful goods and services.

The value of any currency is ultimately based upon the creation of real and progressively distributed wealth. Real wealth creates strong currency; strong currency creates real wealth – the two are inseparable – and this also depends upon having a healthy, dynamic democracy through which we can all have trust in our government.

Opponents of independence often cite the argument that a Scottish currency would inevitably be a weak currency. There is nothing inevitable about this at all.

If we use our currency to support the development of a productive economy then Scotland will reduce our reliance on imports and create greater capacity for producing exports.

Whatever Scotland’s balance of trade is while we remain part of the Union – and the data on this is unreliable – this can change when we are independent if we use public money wisely to build a wealth-creating economy, which in turn will support the value of our currency.

We will re-iterate what the Scottish Currency Group has said before, quoting the words of Franklin D Roosevelt; “There is nothing to fear but fear itself.”