Think tank proposes digital currency for Scotland

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An independent think tank has called for the creation of a new digital currency for Scotland, saying that the country’s political and economic status mean it is “uniquely placed” to pioneer the technology.

The New Economics Foundation (NEF), based in London, said the creation of a digital currency called “ScotPound” would make Scotland a world leader in financial innovation, further supporting the UK’s existing fintech industry.

The system is detailed in a new report published in conjunction with Common Weal.

The idea has been developed completely independently from Scotcoin, an existing digital currency which was launched in 2014.

Under NEF’s proposals, a new public-interest institution called BancaAlba would become the sole issuer of new electronic money called ScotPounds (S£).

BancaAlba would operate a not-for-profit payment system – ScotPay – which would be free to use for businesses, individuals and government. Transactions would be carried out via mobile phone SMS or app, online, or with voice recognition software.

Everyone on Scotland’s electoral register would have an account with BancaAlba and receive a “citizen’s dividend” of S£250 on turning 16 or 18, adding around S£15 million to the money supply each year without adding to Scotland’s debt burden.

The new payment system would be entirely parallel to the existing sterling payment system and its £3 million operating costs would initially be covered by the Scottish Government.

NEF’s report calls on Scotland’s political parties to commit to either implementing or exploring the proposals further in their 2016 election manifestos.

Duncan McCann, researcher in economy and finance at NEF, said: “Scotland is in a unique position to take full advantage of current trends in digital financial innovation.

“A new currency and payment system like ScotPound would operate alongside pounds sterling, supporting small and medium businesses and putting money in the pockets of those currently excluded by the financial sector.”

Professor Nigel Dodd of the London School of Economics added: “This report is an extremely timely and welcome intervention in current debates about the way our monetary system is governed and organised, and specifically about the merits and efficacy of conventional Quantitative Easing.

“Given that the currency question played a major role in the Scottish referendum debate last year, I have no doubt that the proposals for a ScotPound will inform future discussions in Scotland. NEF’s proposals are extremely clear and convincing.”