IN this final article of the current series from the Scottish Banking & Finance Group, we will summarise the key propositions we have made in the 33 articles published in The National since March.

Scotland is seeking national independence at the time of a major combined climate, biodiversity and environmental crisis. A radical social and economic transformation is essential in order to achieve independence and address the risks to human survival created by climate change and ecosystems collapse.

The failure of COP26 to provide the leadership required in order to limit global warming to 1.5C will require individual nations to take action for themselves. The UK shows no signs of taking the necessary action and this is further reason for Scotland to be seeking our independence, so that we can make our own choices and seek to provide leadership and example.

There are three essential elements needed to make this transformation:

  • Our own currency and central bank immediately after formal independence;

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  • Reform of our banking and financial system so that money is allocated to bring our human, physical and natural resources into play in ways which create all the things we need to live well and in harmony with nature;
  • A democratic written constitution which enshrines the individual and collective rights of all citizens and which also sets out the obligations of the state to its citizens, and citizens’ rights and obligations to the state and to one another;

Whoever controls the creation and allocation of money controls the use of resources – labour, technology, land and other physical resources. If we wish to live in a democracy, control of money must be in the hands of the citizens of the country, who are free to elect a government of their choosing.

That government must be fully accountable to the citizens. The banking and financial system must be regulated and directed in its purpose by a people’s government; this is essential because it is the design of the banking and financial system which shapes the flow of money and its purposes.


Scotland will be unable to exercise our own choices and deliver our own priorities unless we have our own currency. A currency controlled by another country, as would happen if Scotland were to continue to use sterling, means we will depend upon that foreign power to make the same choices and share the same priorities.

If we want to create a “wellbeing economy”, a “fairer and more equal society” and make the transformation of our economy and way of life to prevent even more climate and environmental damage, then we cannot continue to use the pound. Sterling is not a people’s currency, it functions as a bankers’ currency.

The UK is an economy dominated by banking and financial interests which have no loyalty to the interests of the citizens of the UK or anywhere else. It is footloose and self-serving and works in tandem with global multinational corporations. These are the interests that emasculated COP26. Sterling is managed for purposes which are determined by banking and financial interests.

Establishing our own currency immediately after independence is, therefore, an essential pre-condition for independence and the freedom to make our own choices. It is not, however, a sufficient condition. We must also reform our banking and financial system; if we don’t then Scotland will remain a colony, under the yoke of footloose global financial and corporate interests.

Banking and financial reform

Unless they are properly regulated, banks and other financial institutions, such as pension funds, will serve their own interests and not the interests of citizens or the nation. They will continue to allocate money to financial and property speculation and not for productive purposes.

They will continue to sell Scottish companies and resources to the highest bidder so that Scotland becomes increasingly dependent upon foreign investment while owning and controlling ever fewer of our own resources. Bank credit must be directed, by means of regulation, to productive purposes and also prohibited from sustaining a carbon-based economy. This calls for a framework of incentives and central bank support which directs bank credit towards priority economic sectors and companies, and imposes either strict limits or a complete ban on bank credit for carbon intensive sectors such as fossil fuels, their derivatives, and internal combustion engine vehicles.

We must also ensure the resilience and safety of our banks so that they do not fail through reckless lending and financial speculation, and so they are safe places for citizens to deposit their money and savings. A rigorous bank licensing framework must be put in place.

Pension fund regulation also needs to be reformed so that their investments are made, not solely in the interests of their beneficiaries, but also in the wider public and national interest. Pension funds command vast amounts of capital which needs to be deployed in ways which support the productive economy and the transition towards meaningful and effective decarbonisation.

THE law of fiduciary duty under which pension funds currently operate must be replaced with a new statutory legal framework, which requires them to take account of the interests of their beneficiaries and also the wider public and national interest. This will facilitate the possibility of pension fund investment choices being aligned with Scotland’s future evolving industrial and environmental restoration strategy.

The future value of pensions depends entirely upon the capacity of our economy to produce all the things we need to live well and in harmony with nature. Allocating pension funds for speculative buying and selling of financial assets is not a productive use of their capital.

A handsome retirement pension will be worthless if the goods, services and infrastructure we all need have not been produced by our economy or if their production has damaged the environment.

Climate campaigners have been calling for pension funds to disinvest from fossil fuels. However, “fiduciary duty” constrains them from doing so because it is seen as contrary to the financial interests of beneficiaries and because disinvestment requires someone else to buy the assets.

To overcome this hurdle, Scotland’s central bank will need to purchase fossil fuel (and other carbon intensive assets) from pension funds, banks and other financial institutions, and take them out of financial markets permanently.

Central banks elsewhere will also need to do this in order to complete the elimination of the fossil fuels financial market, but an independent Scotland can provide a lead. The proceeds of this form of QE can then be re-invested to support Scotland’s productive capacity, effective decarbonisation and environmental restoration.

Purchase of fossil fuel and other carbon intensive financial assets by the central bank will need to be time limited so that reckless investors who retain such assets or acquire new ones cannot then offload them when their value eventually collapses. “Carbon QE” must not be available as a form of long term insurance for reckless investors who insist on continuing to support carbon intensive industries.


The purposes of our money and of our banking and financial system must be derived from a new Scottish constitution which enshrines the fundamental rights of all citizens. These are rights which the underpin “wellbeing”.

The new Scottish state must be an enabling state rather than a paternalistic state. This means that the overriding obligation of the Scottish state will be to enable all citizens to achieve their maximum potential, regardless of ability. To realise their full potential all citizens should have fundamental rights established in a written constitution, including rights to: food, energy, housing, clean air and water, health, education, adequately paid work, a pension and all the rights enshrined in the European Convention on Human Rights.

The constitution should also establish the principle of “subsidiarity”, which means that power to make decisions and access to finance is devolved down to the most local level practical.

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This builds the constitution on decentralisation of power in Scotland and will have major implication for the future reform of local government.

The principle of subsidiarity would also underpin the reform of the banking and financial system as it will require the decentralisation of the banking system through the establishment of community based and mutual banking institutions.

Effective decarbonisation is going to require the localisation of production as much as possible, particularly in the production of food and energy, and improving energy efficiency within communities. Localisation of production will assist in a reduction in the volume of goods being transported over long distances, which itself will help reduce overall national energy use.

In publishing our series of articles in The National the SBFG hopes that we have stimulated the conversation we believe Scotland must have about how we can achieve true independence and what we wish to achieve as a newly independent nation. We would like to thank The National for providing the space in order to share our ideas.

More information about a new Scottish currency can be found at