MANY politicians, the media and the general public, regard the currency of an independent Scotland as a narrow technical issue which does not resonate with voters.

But that should not be the case: if an independent Scotland has its own currency, the Scottish Government will become a currency-issuer rather than (as at present) a currency user. This will open up new policy opportunities for the Scottish Government which could be transformative. An example is the Scottish NHS (SNHS).

The SNHS has been allocated £19.2 billion by the Scottish Government for 2023-2024, but even this record level is clearly inadequate to meet demands as a result of demographic trends, technical advances in medicine and rising expectations.

The Scottish Government budget is currently squeezed by the Barnett formula (devised to reduce the higher public spending per head in Scotland towards the UK average) and the Fiscal Framework (if Scotland’s population and tax receipts grow at a slower rate than elsewhere in the UK).

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This pressure will be intensified if UK governments (whether Labour or Conservative) continue to impose restrictive fiscal rules which will inevitably drive further austerity.

In contrast with the Scottish Government under devolution, the UK Government is not constrained by money – its central bank is a currency-issuer and is required to create money to fund whatever level of spending is determined by the UK Government.

This was clearly seen during the Covid crisis when the Bank of England used massive levels of “quantitative easing” (issuing bonds to the private sector which it then bought back) to allow the UK Government to purchase goods and services and fund furlough payments to support the economy. Much of this money is now owed by the UK Government to its own central bank and does not need to be repaid.

When Scotland becomes independent (but crucially only with its own currency and central bank), the Scottish Government could do the same. Like the UK Government, Scotland will become a currency issuer with the full range of fiscal powers, including the ability to use the mechanism of quantitative easing.

The National: NHS

As a currency issuer, we would have greater flexibility to strengthen our SNHS and other public services.

There will of course still be constraints on the level of public spending, but the availability of money will not be one of them. The goods and services have to be available to purchase. If the real resources (for example, skilled labour) in the Scottish economy are unable to meet the level of demand for them, increased imports and/or inflation are likely to become problems unless mitigating action is taken.

It is a fallacy that sovereign governments need to raise taxes before they can spend, but taxation does have an important role in taking money out of the economy to control inflation. It is also a vital means of bringing about a fairer society and creating appropriate incentives or disincentives for actions which benefit or harm the community.

Recognising the additional flexibility which a currency-issuer has over economic policy compared with a currency user also turns on its head the “Where will the money come from?” question often asked by sceptics about the economic prospects after independence.

The relevant question is rather “How can we increase the productive capacity of the economy?”.

This is also a key question when considering policy to improve the SNHS, because not only is more government spending essential but it needs to be targeted in the right way so that the SNHS is more effective in meeting the challenges.

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Questions of how best to organise the delivery of health services in Scotland will remain. At present, available health funding is allocated to 14 regional health boards. This structure may need review, but the prospect of increased public resources which a Scottish currency should enable will help to protect the basic values of the SNHS from the more privatised model adopted in England.

However, it is clearly not enough to pump fresh funding into a system if it is haemorrhaging staff and a supply of trained healthcare professionals is unavailable. It must be a worthwhile investment to ensure that staff are well trained, supported, justly remunerated and valued. Areas of investment could also include research and development, and enhanced training to ensure medical practice keeps pace with modern technology.

This will not only benefit Scotland by providing secure employment for our graduates and attracting a highly qualified workforce, but it will also promote a wellbeing economy and a healthier happier population.

Using our own currency to invest will create assets – whether in infrastructure, equipment or highly trained healthcare personnel. These are the means by which the people of an independent Scotland can lead healthier happy lives. Health will be Scotland’s wealth.