Economists at Strathclyde University in Glasgow, Scotland, have warned that Scotland’s financial sector needs to accelerate its adoption of technology to avoid a future banking crisis. According to the economists, adopting leading-edge fintech could create 15,000 jobs in Scotland over 10 years and failing to do so would have the opposite effect.

“Fintech is evolving at a rapid pace and the consequences of digitalisation are being hailed as a ‘game changer’ for both the banking and securities industries,” said Daniel Broby, director of the Strathclyde University’s Centre for Financial Regulation and Innovation.

“Financial transactions are set to become instantaneous, traditional paper money is being replaced by digital money and entrepreneurs will be able to raise money directly from the public,” added Broby. “All this is good news for the consumer. But it is critical that we create the right conditions to enable companies to develop fintech faster, if Scotland’s financial sector is to remain globally competitive. The technology exists. Either Scottish financial institutions adopt it and thrive, or they ignore it at their peril.”

The warning came at a symposium on the future of fintech held last Friday, September 2, at the University of Strathclyde’s Technology and Innovation Centre.

The Strathclyde economists are persuaded that fintech is being driven by blockchain technology and distributed ledgers, two major innovations poised to transform the way the financial sector handles not only payments but also identity, transactions and debt information.

Broby argued that the adoption of advanced fintech should be accelerated. “There’s potentially a huge opportunity for Scotland but we need to seize it,” he said.

Broby and co-author Tatja Karkkainen presented a conference whitepaper titled “Fintech in Scotland: Building a digital future for the financial sector.”

The potential for a Scottish digital currency — a local currency backed by the Scottish parliament and banks — is examined in Broby’s whitepaper and it has been discussed at the symposium.

It’s worth noting that the possibility of a Scottish national digital currency was also discussed in connection with the Scottish independence referendum in September 2014. The referendum failed, but the possibility of a new referendum surfaced again after the U.K. voters chose Brexit, the exit of the U.K. from the European Union, on June 23. In fact, Scottish voters chose to stay in the E.U. and Scottish politicians declared that they would put the referendum back on the table. However, Broby’s proposal could be implemented even if Scotland were to remain a part of the U.K.

“We present the case for a Scottish backed crypto currency,” says Broby in the whitepaper. “Most crypto currencies have been developed by the private sector. Scotland could either host such an initiative or develop its own. This could be done by providing the backbone in the form of an encrypted distributed ledger. As a sponsored initiative, a copy of the transactions could also be mirrored in a central registry. This could be maintained by the Scottish government. The advantage of this is that there remains an element of oversight, be it for tax or money laundering. This would prove easier to regulate than a mined and anonymous blockchain.

“The rationale for a Scottish digital currency is supported by its unique political positioning,” continues Broby. “Legally, there is no need to have the legal capacity to issue banknotes to set up a cryptographically enabled transaction system. As long as a bank or group of banks is willing to guarantee the exchange of the currency to sterling (or a menu of exchangeable currencies) then the system could be just run from a [distributed] ledger.In most countries it is only central banks who are permitted to issue currency. In Scotland, Bank of Scotland, Clydesdale Bank and The Royal Bank of Scotland currently issue banknotes. Scottish Banknotes are legal currency in as much as they are approved by the UK Parliament. Scottish banknotes are not technically legal tender even in Scotland but the widespread use has established a precedent which can be built on. The Scottish payment system currently exists without a legal framework.”

“This legal ambiguity can be used to issue Scottish digital currency, backed by deposits from these currencies with the Bank of England,” concludes Broby. “The Scottish Parliament would have to support the initiative and presumably pass legislation on [digital currencies] to ensure its success.”