Would an independent Scotland see capital flee south?

We wrote a few weeks ago about the possibility of capital flight from Scotland in the event of its resident population voting to separate from the UK. (Read our articles on the Scottish independence referendum here.) The SNP dismisses this as ludicrous. But it isn't.

For the last six months I have been getting emails from readers about whether they would be wise to take their money out of the likes of Standard Life and Alliance Trust, and it was a hot topic when I talked to lots of you who came to our conference in London a few weeks ago.

Several people asked me if they should take their money out right now as a precaution against capital controls being put in place immediately after the vote. I think that would be extreme.

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Even if Scotland's residents do vote to divide the United Kingdom, the division won't actually happen for some time: the SNP claims it will take 18 months, but most people are certain it will take rather longer. Assuming no extraordinary events, that gives plenty of time for you to move your money after the vote.

Would you remove your money from Scottish financial institutions if Scottish residents vote to leave the UK?

The negotiation period could easily turn into one reminiscent of those seen in eastern European countries following the collapse of the Soviet Union: money would flow "unchecked" (assuming no capital controls) out of Scotland as its new government worked to persuade another government who have already made it clear they don't want to share a monetary regime to share a monetary regime.

Would Moneyweek readers join that capital flight? My guess is that they probably would why take the risk of leaving your cash in an institution in a country that is about to be foreign with an as yet unknown currency system and regulatory authority, when you could bring it home?

(This matters by the way 66% of all Isas and 70% of all pensions sold by Scottish companies are sold to people resident outside Scotland.)