WE welcome Professor Ronald MacDonald's confidence that, post-independence, Scotland may have a faster growth rate than the rest of the UK (Clarity needed on monetary policies, Letters, May 25).

It is accepted that a richer, independent Scotland with a trade and fiscal surplus, in the absence of other policy interventions, may create the possibility of higher inflation and that the Scottish non-oil sector may have to take the brunt of any adjustment. However, we challenge his assumption that an independent Scotland as part of a monetary union "would not have the ability to tackle differential economic circumstances between the economies of Scotland and the rUK".

A dependent Scotland will continue to be inhibited in our ability to tackle differential economic contexts as we are currently part of this monetary union, and Scotland's and rUk's economies already have a tendency to diverge. An independent Scotland would have the powers to develop policies to mitigate any negative impacts of faster growth. Fiscal surpluses or smaller deficits would allow Scotland to address some of the deep structural issues that are not being addressed within the Union. Remaining within the Union precludes these options and independence allows greater capacity to address Scotland's economic and social challenges and opportunities.

Prof Mike Danson, Heriot-Watt University; Prof Andrew Cumbers, Glasgow University; Dr Ross Gillanders, St Andrews University; Dr Douglas Chalmers, Glasgow Caledonian University; Prof Ian Thomson, Heriot-Watt University; Dr Duncan Ross, Glasgow University; Dr William Craig, Robert Gordon University; Prof Stephen Osborne, Edinburgh University; Prof Bryan MacGregor, Aberdeen University; Geoffrey Whittam, Glasgow Caledonian University.

Ronald MacDonald emphasises that independence and sterling would remain compatible only for as long as the separated economies remained convergent. The economic case for independence surely hinges upon the Scottish economy growing while that of the rest of the UK continues to shrink. That differential can only materialise into living standards with an independent currency and differential exchange rates.

He then undermines this argument with a doomsday scenario of the financial markets unpicking any attempt by the Scots to fix their exchange rates at an appropriate level. In short, these markets - which exist purely for the private profit of a relative handful of speculators - will be the final arbiter of our economic destiny.

There is, however, a solution. At the peak of the Asian financial crisis in July 1997, the International Monetary Fund offered to rescue the Malaysian currency on the condition that foreign capital would be free to buy up its assets and natural resources. Prime minister Dr Mahathir bin Mohamad refused to sell out and created legislation to regain control over the national currency. To achieve this, Malaysia recalled all foreign-held domestic currency into its own commercial banking system. That way no foreign financial market could settle speculative trades in the Malaysian ringgit and speculation ceased.

Scotland's new currency could be managed in the same manner from the outset - all foreign exchanges would be convertible only through its new central bank at the official rate.

RF Morrison

Helensburgh