In a new report, the Centre of Financial Regulation and Innovation (CeFRI) by Strathclyde Business School in Glasgow has strongly recommended fintech adoption in Scotland and has presented a case for a Scottish cryptocurrency among other things.

The paper, “FINTECH in Scotland: Building a digital future for the financial sector”, written by Daniel Broby and Tatja Karkkainen in conjunction with the Fraser of Allander Institute was presented at the Fintech symposium organized by CeFRI. It warns that Scotland could lose over 14,000 jobs if it fails to adopt financial technology, often referred to as “Fintech”.

“Financial Technology – or Fintech – has the potential to create nearly 15,000 jobs in Scotland over 10 years. But failing to adopt leading-edge technologies would have the opposite effect, with a loss of just over 14,000 jobs – or £635 million in wages”, the official release said.

In addition to its call for fintech adoption, the paper has also outlined the benefits of cryptocurrencies and presented a case for Scottish cryptocurrency.

“The place where Fintech brings together all its technologies and which holds the most promise for the future is in a global crypto currency. The case for this is self-evident and its long term adoption a likely outcome of the internet”, the paper states.

Scottish Cryptocurrency

According to the paper, a Scottish backed cryptocurrency would have a number of advantages – it would strengthen the image of Scotland as a Fintech hub, give banks access to practical blockchain applications, and create a nucleus around which to build other Fintech activities. It further says that that Scotland could either host such an initiative or develop its own, which could be done by providing the backbone in the form of an encrypted distributed ledger.

“As a sponsored initiative, a copy of the transactions could also be mirrored in a central registry. This could maintained by the Scottish government. The advantage of this is that there remains an element of oversight, be it for tax or money laundering”, it added.

It further recommended an “atomic clock” as a back up to timestamp digital transactions and support it with a black fiber financial backbone (that links into existing connections), which would provide added security to the blockchain.

The authors say that the rationale for a Scottish digital currency is supported by its unique political positioning. They note that the Scottish payment system currently exists without a legal framework and ambiguity could be used to issue Scottish digital currency, backed by deposits from these currencies with the Bank of England. In addition, they say that the Scottish Parliament would have to support the initiative and pass legislation on cryto-currencies to ensure its success.

The authors concluded saying: “We make a recommendation that support for a Scottish cryptocurrency be forefront in the move to position Scotland as a digital hub. As yet, no large government has backed a digital currency and we suggest this may well be something that could make a difference for Scotland.”