Britain's government granted Scotland the authority to borrow money in its own name yesterday, in a move aimed at showing Scots that they could enjoy some benefits of independence while remaining part of Britain.
Scotland votes in September on whether to dissolve the 307-year-old union with England. Last week, the British finance minister, George Osborne, said an independent Scotland would be unable to keep using the pound as its currency, independence campaigners' preferred option.
Scotland's First Minister Alex Salmond responded that this was against Britain's own economic interests, and that an independent Scotland might refuse to take on its share of Britain's debt if it was not part of a formal currency union.
Yesterday's announcement allows Scotland to issue a modest £2.2 billion (HK$28.5 billion) of sterling-denominated bonds, which will not be backed by the rest of Britain, instead of borrowing money via London as at present.
"Being able to issue its own bonds gives Scotland new powers and new responsibility, within the security of the UK," Osborne said. "Alongside the considerable new tax and spending powers we have already given ... it is further evidence of why being part of the UK gives Scotland the best of both worlds."
US cities and German states issue bonds independently of their federal governments. To date, administrations in Scotland, Wales and Northern Ireland have had little fiscal independence from London.
Britain's finance ministry told Scots that they would probably have to pay more interest if their pro-independence Edinburgh government chose to raise funds without a British government guarantee.
"Access to [existing finance] already allows the Scottish government to benefit directly from the UK's low costs of borrowing. Issuing its own debt is unlikely to be as cheap," the ministry said.
Scotland's government says it would have stronger finances than the rest of Britain after independence, as it expects to inherit most of Britain's North Sea oil and gas.