Scotland could revert to a 400-year-old currency called the “merk” if it becomes an independent country, an eminent economist has suggested.
Professor Gavin McCrone, a former chief economist at the Scotland Office, said that the new state could follow the example of the Republic of Ireland when it split from the United Kingdom in 1922 – by establishing its own currency which is pegged to the pound.
In a report submitted to the Holyrood parliament, Professor McCrone said Scotland “could manage perfectly well as an independent country”, adding that it was “even possible that it might eventually do better economically than remaining as a part of the UK”.
But after an initial period of monetary union with the rest of the UK, “sooner rather than later a Scottish government would find it necessary to set up its own central bank as lender of last resort, which would also have power to issue its own currency”.
He added: “This could be the restoration of the pre-1707 pound Scots, or indeed the merk, and it could be pegged against sterling initially on a one-to-one basis, as Ireland’s currency was for a long time, which would reduce transaction costs.”
The merk was a silver coin in use in Scotland in the 16th and 17th centuries, worth 13 shillings and 4 pence or about one English shilling. Half-merk and quarter-merk coins were also issued.
If Professor McCrone’s merk idea does not find favour, Scotland has an extensive range of former coins from which to draw inspiration, including the dollar, pistole, lion, ryal, ducat, “sword and sceptre” and even the unicorn, a coin issued by James III in the 15th century. Lower-value coins included the bawbee, groat, testoon and plack.
The Scottish National Party wants to keep the pound in the event of a Yes vote in September’s independence referendum, but leading Westminster politicians argue this would not be possible.
The Chancellor, George Osborne, has said there is “no legal reason” why the rest of the UK would want to share sterling with an independent Scotland.
Meanwhile, the Yes campaign received a boost when the Sunday Herald became Scotland’s first national newspaper to publicly back independence.
In an editorial, it said: “We are sure that Scotland, through the talent of its people and its natural resources, can not only survive economically but can thrive, bringing lasting benefits for the common good.”