The topic of whether Scotland would adopt the Euro as its currency if it became independent has been hotly debated. Unfortunately, much of the discussion on this issue relates to EU rules that are widely misunderstood. We will explain further below.
The short answer is: No. Scotland would not necessarily have to use the Euro. If however an independent Scotland decided to join the EU as a full member, then according to the joining process, Scotland would have to commit to using the Euro at some unspecified point in the future - the EU has several members who have no intention of ever reaching that unspecified point.
- The Scottish Government is currently committed to joining the EU as an independent country.
- It is technically impossible to join the EU if you do not have your own currency. Joining the EU involves joining the European Exchange Rate Mechanism, which involves pegging the domestic currency to the euro within a specific band and without a sovereign currency, you can’t do that.
- In principle, all Member States that do not have an opt-out clause (i.e. Denmark and previously the UK) have committed to adopting the euro once they fulfil the necessary conditions. However, it is up to individual countries to calibrate their path towards the euro or not to – no timetable is prescribed.
- The Member States that joined the EU in 2004, 2007 and 2013, after the euro was launched, did not meet the conditions for entry to the Eurozone at the time of their accession. Therefore, their Treaties of Accession allow them time to make the necessary adjustments.
- It is highly likely that an independent Scotland would continue to use the sterling as its currency, at least during a transitional period, before transitioning to a Scottish Pound.
- To use the euro you have to meet the necessary conditions set by the EU and Scotland doesn’t, not least because it neither has nor plans to launch its own sovereign currency immediately after becoming independent.
- Scotland would be empowered by the EU to decide the timetable to meet the conditions and as quoted, no timetable is prescribed; Scotland could be on an indefinite path to adoption. There are several nations to whom this process already applies, such as Bulgaria, Czechia, Hungary, Poland, and Romania.
An independent Scotland does not need to use the euro as its currency under any circumstances.
If an independent Scotland joins the EU as a full member state, the EU will give the Scottish Government full control over the timescales to meet the criteria. The Scottish Government can therefore indefinitely avoid joining the euro. However, a future Scottish Government might decide to join the euro voluntarily.