Digital innovation has opened up exciting possibilities for new kinds of money and exchange.

As a clearly defined economic and physical area of 5.3 million people, with a strong national identity, and a devolved parliament, Scotland is perfectly placed to create a new digital currency and payment system. Such a scheme could stimulate local economies, create a level playing field for small businesses, and support social justice for all its citizens.

The question of currency loomed large in the Scottish independence referendum campaign. The fear of losing sterling was one of the decisive factors in the eventual result. But the debate lacked an informed analysis of what independence would mean for the pound, or what a new Scottish currency could look like.

Crucially, Scotland does not have to give up sterling in order to introduce its own new domestic digital currency. Such a new payment system could operate alongside sterling and provide social and economic benefits that complement the continued use of the UK’s national currency.

Money is one of humanity’s greatest inventions and a powerful social technology. But most people, despite using it every day, have never considered what money really is, how it works and its impact on society.
A growing group of innovators have realised the potential to change the design of money so that it better serves people and the planet. So far, most such schemes have been on a small scale, but developments in internet and mobile phone technology are offering new, bigger opportunities.

In the UK, 97% of new money is created by commercial banks in the form of interest-bearing debt – loans. Scotland, like the rest of the UK, would benefit from a pluralist monetary system that includes forms of money not based on bank debt creation to mitigate the worst consequences of the current system and create a more diverse and resilient economy.

This report outlines the creation of a new national digital currency, ScotPound, and free-at-point-of-use payment system, ScotPay, for Scotland. Our proposals draw on over two decades of research into top-down reform of existing national currency systems and bottom-up local and complementary currencies.

The new Scottish currency would be non-convertible and purely digital, operated through an arm’s length public enterprise – BancaAlba.

The introduction of such a scheme, even if relatively small-scale at first, would have a number of social and economic benefits:

  • An economic boost: We propose a 250 ScotPound (S£) dividend be given to each Scottish citizen, increasing the overall purchasing power within the economy. The injection of funds would not add to the UK deficit and we estimate the payment infrastructure of the system would be low cost – in the region of £3 million – all at a time of austerity.
  • Lower costs for business: A new payment system – ScotPay – would provide the world’s first publicly owned, not-for-profit national payment system, enabling Scottish businesses to accept payment for goods and services without being charged fees by banks and global credit card firms.
  • Socially inclusive: The currency would be available to all, with mobile phones the main instrument for making payment via text message or on an app. For those unable or unwilling to use the technology, a voice recognition system would also be implemented to ensure inclusion.
  • Leading by example: The project would demonstrate that a new national currency can be created and implemented. Successful implementation could significantly reduce the chances that any future debates about independence would be unduly influenced by the fear of losing sterling. The programme would improve understanding about how money works and its potential uses. Scotland would position itself as a world leader in financial innovation.

The specification and design of the ScotPound currency, the ScotPay public interest payment system, and the arm’s length public enterprise operator BancaAlba set out in this report are not final blueprints. In highlighting the huge economic and social potential of financial innovation, we hope that Scotland’s people and political parties will debate and consider such a scheme, with or without another independence referendum.