Thanks to the eurozone crisis, everyone is now familiar with the system of government borrowing by issuing bonds bought by the market on what it considers a viable yield rate at the time.
Where the credit rating agencies downgrade the credit rating of a country, the market will demand a higher bond yield to cushion the risk they take in buying government bonds – and
The Scotland Act has already been amended to make it possible for the Scottish Government to issue its own bonds – allowing it to raise substantial sums to fund infrastructural projects.
UK Treasury Secretary, Danny Alexander, is starting a consultation process today to establish what the implications, advantages and disadvantages would be of both the Scottish and UK governments issuing bonds. The impact of this situation would affect both Scotland and the rest of the UK.