Pupils have created their own currency - the Kelso Bawbee
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Kelso High School has declared its "independence" from Britain.
Pupils read out a special declaration, raised their own flag and have even adopted a new currency to mark the historic occasion.
The school is carrying out the experiment as a way of studying the 300th anniversary of the Act of Union.
It will remain as a "breakaway" state until a referendum in March when pupils will decide whether to stay independent or rejoin the UK.
Pupils Sebastian Murray, 15, and Saskia Peace, 16, read a declaration of independence which the pupils had written for the event.
'Inalienable rights'
It contained the pledge: "We hold these truths to be self evident, that all pupils are created equal.
"That they are endowed by their creator with certain inalienable rights.
"That amongst these are the multi-use of the games area, a plasma screen at the front door, a computer in every room and the pursuit of healthy eating."
A flag was raised and a declaration of independence read out
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Over the next few weeks the new 'country' will be visited by representatives from the EU, the UN and others who will advise them on how to make the most of their independent status.
"As it is the 300th anniversary of the Treaty of the Union, we thought we would undertake this experiment and we are expecting to learn a lot but also to have a lot of fun in the process," explained rector Charlie Robertson.
As part of their independence, the citizens of Kelso High School have adopted a new currency - Kelso Bawbees - a new flag and national anthem.
The school is also issuing its own passports.
A referendum of the 651 pupils will take place in March to decide the fate of the 'nation'.
The results will be featured on a BBC Radio Scotland programme Passport to Kelso to be broadcast on 25 March at 1105 GMT.