Scotland as an optimal currency area

Jane M. Binner, Sajid M. Chaudhry, Andrew W. Mullineux, James L. Swofford

Research output: Contribution to journalArticlepeer-review


The June 2016 UK referendum on continued EU membership where the people of Scotland voted to remain, while the rest of the United Kingdom voted to leave, once again makes the issue of whether Scotland is an optimal currency area very topical. England voted strongly to leave Europe while Scotland backed remain by 62% to 38%. The Scottish government published its draft bill on a second independence referendum in October 2016. The move does not mean another referendum will definitely be held, but this does raise the possibility that Scotland might choose independence and staying in the EU without the rest of the United Kingdom. If Scotland charts a course of independence from the rest of the United Kingdom, then they would likely either issue their own currency or join or form another currency area.

In this paper, we test the microeconomic foundations of a common currency area for Scotland, United Kingdom, and the rest of the United Kingdom without Scotland. We find that the United Kingdom, Scotland, and the United Kingdom without Scotland all meet the microeconomic criteria for a common currency area. In contrast, banking data suggest that lending in Scotland is different from lending in the rest of the United Kingdom, adding some doubt to the issue of whether or not Scotland is a common currency area with the United Kingdom.
Original languageEnglish
Pages (from-to)315-327
JournalScottish Journal of Political Economy
Issue number4
Early online date5 Jun 2018
Publication statusPublished - 1 Sept 2018

Bibliographical note

This is the peer reviewed version of the following article: Binner, J. M., Chaudhry, S. M., Mullineux, A. W. and Swofford, J. L. (2018), Scotland as an optimal currency area. Scott J Polit Econ, 65: 315-327, which has been published in final form at  This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.


Dive into the research topics of 'Scotland as an optimal currency area'. Together they form a unique fingerprint.

Cite this