Scotland Debates Independence and Launching New Currency

However, the key issue for Scotland is whether or not they will be confident enough to launch their own currency. Currently there is much talk about Scotland either continuing to use the British sterling or even perhaps moving into the Eurozone. Both these aspirations are desperately misguided and both will lead Scotland into the exact situation that Greece, Spain, Portugal, Italy and Ireland face today. Because the Scottish currency will, in both these scenarios, be issued by a foreign central bank they will not have discretion over their own fiscal policy. Thus, without issuing their own currency — which, of course, will have drawbacks of its own (the Scotch pound would probably devalue vis-a-vis the British sterling upon issuance) — we can be fairly sure that Scotland’s dream of independence would soon become a nightmare.

http://www.nakedcapitalism.com/2012/07/scotland-debates-independence-and-launching-new-currency.html