A finance policy for Scotland

At the national level, monetary policy is regarded as an important tool for government influence on the economy; this importance has been highlighted in the debate over the future of UK monetary policy in a European monetary union. The relevant (interrelated) questions are: how would the UK economy fare with monetary policy applied on a uniform basis across Europe, and with the full integration of national capital markets, and what would be the relative costs and benefits for the UK of a single European currency? These questions are equally valid with respect to the Scottish economy, as part of a single currency area, with a significant degree of financial integration, and with uniform UK monetary policy. It is particularly apposite at this time to consider these questions again for Scotland. Institutional change is proceeding apace within the UK financial sector, both with respect to the organisation and behaviour of the private sector, and also with respect to the policy environment within which it operates. In addition, the devolution debate raises questions about the desirability of policy-making at the Scottish level with respect to the financial sector, either within the present constitutional environment, or within the range of alternative environments under consideration