Would an independent Scotland have to use the Euro?

Stephen Richard — Thu, 04 Nov 2021 17:57:20 +0000

Primary Author or Creator

Believe in Scotland

Stephen Richard Thu, 11/04/2021 - 17:57

Category

Currency

Fast Facts

‘No. Scotland would not have to necessarily use the Euro.’

More details

It’s a regular question and relates to EU rules that are largely misunderstood, whether an independent Scotland would have to necessarily use the Euro as its currency. We say that the question is more about whether an independent Scotland would decide to adopt the Euro or not? We researched the facts and we found the following:

The Truth

The short answer is, ‘no Scotland would not have to necessarily use the Euro.’ In fact, if an independent Scotland decides to join the EU as a full member, then according to the process for joining as a new member, Scotland would have to commit to using the euro at some undefined point in the future.

The Facts

The Scottish Government’s current policy is to be an EU member.
It is technically impossible to join the euro if you do not have your own currency. Joining the euro involves joining the European Exchange Rate Mechanism and without a sovereign currency, you can’t do that.
In principle, all Member States that do not have an opt-out clause (i.e. the United Kingdom and Denmark) have committed to adopting the euro once they fulfil the necessary conditions. However, it is up to individual countries to calibrate their path towards the euro and no timetable is prescribed.
The Member States that joined the EU in 2004, 2007 and 2013, after the euro was launched, did not meet the conditions for entry to the euro area at the time of their accession. Therefore, their Treaties of Accession allow them time to make the necessary adjustments.
It is highly likely that an independent Scotland would continue to use the sterling as its currency, at least during a transitional period.
To use the euro you have to meet the necessary conditions set by the EU and Scotland doesn’t, not least because it neither has nor plans to launch its own sovereign currency immediately after becoming independent.
Scotland would be empowered by the EU to decide the timetable to meet the conditions and as quoted, no timetable is prescribed; Scotland could be on an indefinite path to adoption. There are several nations to whom this process already applies and the EU told them they did not qualify to use the euro; such as Bulgaria, Croatia, Czechia, Hungary, Poland, and Romania.

Conclusions

An independent Scotland does not need to use the euro as its currency under all circumstances.

Due to the use of sterling in the transition period, it is possible for Scotland to join the European Free Trade Association (EFTA), which includes Norway, Iceland, Switzerland and Liechtenstein, to have to access the single market and customs union. EFTA members are not required to join the euro, but they can if they wish to become full members of the EU.
If independent Scotland joins the EU as a full member state the EU will agree that it is not possible for Scotland to adopt the euro and will give the Scottish Government full control over the timescales to meet the criteria. The Scottish Government can therefore indefinitely avoid joining the euro. However, a future Scottish Government might decide to join the euro voluntarily.

Keywords

Language English