This is just a short post analysing the possibilities for Catalonia to gain financial independence.
I have been reading articles reflecting the migration of businesses from Catalonia and holding of investments from current investors [1]. This is all due to the uncertainty (better to hold your money then spend it) since the Catalonia Government wants to mediate first with the Spanish Government [2].
Few commentators however forgot what happened in Greece recently or in Germany. Many Chinese investors are actively seeking assets in Europe. A major port was purchased in Greece by the Chinese and majority of shares were purchased in Deutsche Bank [3].
Therefore the Catalonia Government can easily promote their independence status for investment to the Chinese and Russian investors. Who currently have the liquidity to purchase compared to the western investors. This will be especially true when Catalonia does gain independence because many citizens will withdraw money from the banks, which will cause a bank run (less physical cash available). Some businesses and investors will electronically transfer cash from Catalonia within a week.
Another issue which is not mentioned. The Catalonia Government if prevented from using the Euro has a currency, can not print nor use their currency. No EU members will endorse it therefore options are available for the Catalonia Government.
Short term solution: Use another currency which is one of the IMF special drawing right/reserve currency. The money will have to be shipped in from the Reserve Bank that prints it and there are costs involved. The Chinese Yuan looks promising currently for Catalonia as the Yuan is used now in oil contracts (derivatives) [4].
Long Term Solution: The Catalonia Government can print gold back currency of their own since it has value. However the government will have to stock up on gold reserves to accommodate the amount of money being printed. Another issue is the physical gold bars must be bought provided there is sufficient cash and transported to Catalonia.
Issuing bonds will only be accomplished after a reasonable amount of liquidity is present and the environment for investment is conducive. Anything backed by gold will attract investors in this current financial environment.
The deadline given by the Spanish Government for an answer is the 16 October 2016 and official decisions will be implemented into law (if Catalonia gains independence) on the 19 October 2017 [5].
Interesting times in history, lets wait and see what happens.
[1] https://www.rt.com/business/406517-catalonia-businesses-exodus-turmoil/
[3] https://www.rt.com/business/338949-greece-china-port-sale/
[5] https://www.thelocal.es/20171012/spain-sets-deadline-in-catalan-independence-dispute