Is it possible to launch a new socially inclusive payment system for Scotland? According to Duncan McCann and Josh Ryan-Collins (2015) writing for NEF, the idea of ScotPound could be just the answer. ScotPound could offer “digital money for the common good.” The report authors believe that Scotland is well placed to launch a new digital currency and payment system alongside the existing currency. It is also the belief of the authors that this would provide a much needed economic boost. It could have the impact of lowering business costs, and it would certainly place Scotland at the forefront of financial innovation.
Scotland is a good option for such a new digital currency as it is a small country with a powerful sense of national identity and its own parliament which would be helpful in effective management of the system. It is argued that there is no need for Scotland to give up the pound if it introduced this new ScotPound currency, as there would be no reason that the digital currency could not operate alongside sterling. It is believed that the digital currency would be complementary to the existing currency rather than likely to replace it.
The ScotPound scheme as proposed by NEF would provide an economic boost to the nation. The way that it is believed it would best work would be by giving a 250 ScotPound dividend to every Scottish citizen. This would lead to an increased overall purchasing power in the Scottish economy. It is argued that this would not contribute to the UK deficit, and the payment infrastructure could be built for a low cost, of just £3 million, making it a cost effective system.
There would in parallel be a new payment system introduced, called ScotPay. This would offer a payment system which would be ground breaking in the sense that it would be the “world’s first publicly owned, not for profit national payment system.” This would give Scottish companies the chance to take payments for their offerings with the benefit of not having to pay bank or credit card fees. The currency is anticipated to be socially inclusive, available to everyone, and utilised mostly via cell phones. Payments would be made via text messages or using an app. It is recognised that not everyone is comfortable with this technology, and so voice recognition could be used to help with this.
One of the most interesting benefits of the new currency is that it would allow Scotland to lead the world by showing a new national currency being created and implemented. This would also be beneficial for Scotland in the sense that it would have a back up currency in case of the issue of independence raising its head again. After all, one of the reasons that the independence vote did not secure a “yes” answer is thought to be the worries that people had about losing sterling as a currency. Scotland “would position itself as a world leader in financial innovation” by taking these steps.
Of course, introducing a new digital currency would not be without its challenges. There would be risks associated with taking such a step. One of the issues would be making sure that regulatory compliance could be achieved. It is also believed that there would be a requirement for the currency to comply with the Payment Service Regulations, though the authors suggest that the system that they propose would not actually be considered a payment service under the current terms of these regulations. There are also a number of objections that could be raised about the new currency.
One is that it would have the potential to push inflation up, though this seems rather unlikely. The second challenge is the part of the proposal which suggests giving some currency to the Scottish people for free at the start to get it up and running, especially as this would not seem to be “fair” to other parts of the UK that would not be getting such a hand out. Some might argue that it would create the idea in society that people can get money for nothing, which is a concept that should not be encouraged. Despite the objections, the overall ideas seem promising and are interesting. Will Scotland get its own ScotPound? Watch this space.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.