Dr Jan Fidrmuc contributes to Seminar: “Currency, Banking and Financial Services after the Scottish Referendum”

Published: Thursday 26 September 2013
Economics and Finance

Dr Jan Fidrmuc, Senior Lecturer in Economics, recently took part in a seminar on “Currency, Banking and Financial Services after the Scottish Referendum” held at the British Academy. In his contribution, Dr Fidrmuc discussed the experience of the failed monetary union between the Czech Republic and Slovakia, formed in the wake of the break-up of Czechoslovakia in 1993. He identified three lessons that this historical example offers for the future monetary arrangement between independent Scotland and the rest of the UK.

Firstly, he emphasised the importance of monetary credibility, especially should Scotland choose to keep the pound as its currency after independence. Secondly, he pointed out that betting on the failure of a common-currency area could be surprisingly easy and cheap in a closely integrated financial market. Finally, he suggested that the economic costs of the separation were relatively modest in the Czech and Slovak case. Given that most economic or monetary separations took place on the background of severe economic or political disruptions or occurred in the aftermath of military conflicts, the peaceful and negotiated dissolution of Czechoslovakia can offer valuable lessons for both Scottish and UK governments.

See further information on the seminar and the final report, and also “The Stability of Monetary Unions: Lessons from the Breakup of Czechoslovakia,” by Jan Fidrmuc, Julius Horvath and Jarko Fidrmuc, Journal of Comparative Economics, December 1999, Pages 753–781.

Page last updated: Thursday 26 September 2013