[Closed] Osbourne says no to currency union.

quietly and behind the scenes he has been planning with devastating consequences

You make him sound like a Martian in War of the Worlds 😉

I was referring to the story in the Herald that the Westminster government might not allow independence if the negotiations don't go the way they like.

So in your mind Scotland can just demand absolutely anything in the negotiations, and if Westminster doesn't agree to it then they are being evil bullies?

And why is it reasonable for Scotland to threaten not to take a share of the national debt?

He looks like one of Gerry andersons puppets

Well he has coordinated three warring parties, the BOE and HM Treasury. That is no mean feat. Meanwhile he let's yS condemn themselves out of their own mouths while delivering the occasional killer blow. Very smart bridge playing.

So in your mind Scotland can just demand absolutely anything in the negotiations, and if Westminster doesn't agree to it then they are being evil bullies?

No, Scotland can demand anything, rUK can demand anything, with negotiation an amicable settlement is reached, or not. But if the vote is for Yes, independence is not up for discussion.

You remember what happened at the end of the War of the Worlds? The Martians were defeated by tiny creatures no-one could see.

In our case, that's the midges.

I just can't see how there can be an effective currency union when the aims of the two parties are quiet so different.

How can two countries with different objectives share one bank?

Or the first foot and mouth from "carry on up the kyber?" Where's Terry Scott (RIP) when you need him?

How can two countries with different objectives share one bank?

To be honest, it's not an issue I'm all that fussed about either. It makes sense for trade to keep one currency, but a Scottish Pound pegged to the rUK Pound would do just as well for that, and even if it's not pegged it's not a massive deal.

Just give us our share of the Bank of England reserves, and we'll set up our own central bank.

Heh,l have a polish laddie just joined my dofe group,he didn't know what midges were..his wee face on being shown youtube 😈

To be honest, it's not an issue I'm all that fussed about either. It makes sense for trade to keep one currency, but a Scottish Pound pegged to the rUK Pound would do just as well for that, and even if it's not pegged it's not a massive deal.

It seems to be a deal-breaker for AS though...

Just why is he so keen to keep it?

I've no problem with debts/assets being shared equally, that is only fair.

Just why is he so keen to keep it?

No idea.

I think maybe it's a negotiating stance - you don't reveal your plans B, C and D until you can't have your plan A. And that (despite the triumvirate's pronouncement) won't be decided until after the referendum.

Scotland can just demand absolutely anything in the negotiations, and if Westminster doesn't agree to it then they are being evil bullies?

Thing is, that this whole episode has been kicked off not by Salmond (et al) 'demanding' anything in the negotiations, but rather they have asserted something as a universal and settled fact in their white paper, when in fact its a negotiating position.

[i]Scotland [b]will[/b] continue to use the pound[/i]

The reaction by the unified westminster parties to rule it out has to be seen in that light, its not a negotiation, but a rebuttal of a direct claim made by the yes campaign and put forward as a foregone conclusion.

Salmond's campaign has repeatedly been caught out telling lies to the public about what will happen in the event of a yes vote (the advice over EU membership for example) - countering these lies cannot be seen as bullying, its setting the record straight!

No idea.

I think maybe it's a negotiating stance - you don't reveal your plans B, C and D until you can't have your plan A. And that (despite the triumvirate's pronouncement) won't be decided until after the referendum.

Well, until he comes clean on why I can't see how/why Scotland can keep the pound. Seems only fair.

Just give us our share of the Bank of England reserves,

Those ARE assets and you can have some of them! 😉

You can't reveal your plan B (sic) and C until you have given them some thought! The millstone that is sterling (how appropriate) is already plan B......so we should be saying plans C and D. I wonder what plan w will look like?

The currency issue is huge, simply because right now people and businesses have assets both in Scotland and the rest of the UK. If they get it wrong then an independent Scotland could be in the sh*t before it's even taken baby steps.

Scotland will continue to use the pound

Well, you see, that is true. How it's done - as part of a currency union, as a separate but pegged currency, or just using it anyway the way US dollars are used worldwide - that's the bit that has to be negotiated.

But fundamentally, if Scotland wants to use the pound, there's no way to stop us.

fundamentally, if Scotland wants to use the pound, there's no way to stop us.

Well, there we're back to the 'but you have to join the Euro for EU membership' discussion, and the circle starts again...

if Scotland wants to use the pound, there's no way to stop us.

Of course not. But you will have little control of your economy.

Also, I thought financial services were a major section of your economy? Genuine question, do they still work if the currency isn't yours?

The currency issue is huge, simply because right now people and businesses have assets both in Scotland and the rest of the UK

At the moment business have assets all over the world, as do people. It's still no big deal. If I want to pay a supplier, I go into my online banking, pick the recipient, and send the payment. Whether that's a UK supplier or a German one is all the same, just a different option on the pull-down menu.

Exchange rates can vary, but probably not all that much and not quickly. £/€ hasn't shifted anything worth bothering about for years.

It's not a big problem between NI and RoI, between US and Canada, etc.

But you will have little control of your economy.

As compared to the zero control we have now? 😉

But fundamentally, if Scotland wants to use the pound, there's no way to stop us.

Scotland could try to do that but if for whatever reason the Scottish economy goes belly up whose going to bail it out?

I very much doubt the BOE will be putting its hand in its pocket...so Scotland will have to look after itself ergo why not have an independent currency?

They still work and may even go belly up (then what) but more likely if they are sensible they relocate to a country that is able to support them. Imagine what credit rating you would have if you are based on a country that has technically defaulted and has no lender of last resort.

Say what you like about bankers, but they know what side of the bread is buttered.

So that's the banks gone, oil may/may not start to decline, thank God for the beauty that is whiskey. Protect that for all it's worth!!!

the politics of rUK aren't going to allow for currency union, no mainstream party will go to the electorate in 2015 with a manifesto that sets out how they are going to cede sovreignty

additionally any ceding of soveignty may well have to go to a rUK referendum as this is what has been established as a hurdle for changes in EU treaties that impact our sovreignty

To be honest, it's not an issue I'm all that fussed about either. It makes sense for trade to keep one currency, but a Scottish Pound pegged to the rUK Pound would do just as well for that, and even if it's not pegged it's not a massive deal

as for all the nonsense on the "we won't let them go" is just rubbish. there will be a groundswell in rUK public opinion to say "have you gone yet and close the door on the way out" 😉

As compared to the zero control we have now?

I didn't realise Scotland had no representation in Westminster? Or are your MP's incapable of voting on anything? 🙂

I get the impression that AS is at best being disingenuous, at worst a downright liar..

I think you really need to understand how currencies work, the reserves back up liabilities incurred by the BofE, therefore whilst there may be £50 billion of assets but these are matched by £47 billion of liabilities - you have to look at the net position of £3billion.

If you choose to set up a new currency, you will issue notes etc in exchange for sterling (and maybe other currencies) it will be this exchange process that will create the initial reserves of a new central bank, which will be sterling denominated (or whatever other currencies are exchanged), but then this can be sold (maybe back to the BofE so money supply is reduced) for other assets.

[b]think you really need to understand how currencies work, the reserves back up liabilities incurred by the BofE, therefore whilst there may be £50 billion of assets but these are matched by £47 billion of liabilities - you have to look at the net position of £3billion

That's the nub of it for sure.

Scottish options would seem to be:

1) Ask to join the Euro - Ha Ha Ha
2) Currency union with the UK - No longer an option probably
3) Use the pound anyway - and be at the mercy of big bad Westminster
4) Set up a new currency - which would be annihilated by the speculators before you say 'Knife'

It's been a wonderful fantasy and I'm impressed Wee 'Eck has kept it up for so long.

Surely it's time to stop the game now?

[quote=bencooper ]

But you will have little control of your economy.

See wd's reply explaining that you'll actually have less control. Hardly independence in any fundamental sense is it?

Under a currency union you give up full independence over your economic decision making - both monetary and fiscal policy.

a Scottish Pound pegged to the rUK Pound would do just as well

Also, I thought financial services were a major section of your economy? Genuine question, do they still work if the currency isn't yours?

Surely it's time to stop the game now?

Okay, if you can explain why Sweden, Norway, Iceland, Ireland etc all mange fine by themselves, but somehow Scotland will crash and burn without the rest of the UK to look after us.

Scotland has a strong economy, plenty of natural and human resources, we'll be fine on our own.

Oof. We're using Iceland and Ireland as role models? 😀

Iceland, Ireland etc all mange fine by themselves,

I'm thinking you may have missed out on some fairly big news stories over the past few years...

Okay, if you can explain why Sweden, Norway, [s]Iceland, Ireland[/s] etc all mange fine by themselves

The issue is they are fully independent and in charge of there own destiny rather than trying to peg their economy to Germany by using the Euro.

For Scotland to be successful it would need to be fully independent. A half cut "we'll still use the pound" would only end badly. This is whats happening currently with the smaller Euro states (Ireland, etc...)

ben - can you give me a link to Scotsave, as I'm looking for a savings account giving me higher returns on investments. Scotland will be honouring deposit guarantees won't it?

As compared to the zero control we have now?

I didn't realise Scotland had no representation in Westminster? Or are your MP's incapable of voting on anything?

This, that is just like saying England or Wales has no control over its currency.

Ben why would you pick three counties/regions that have ALL undergone major destructive banking crises to support your case. That seems slightly odd.

If Scotland goes independent, it has to issue it's own debt to fund itself and, unless it want to technically default, to make payments to rUK. Who will hold these bonds? The main holders will clearly be Scottish banks for regulatory, liquidity and economic reasons. But who back stops the banks? Err the BOE? So are they going to accept naked sovereign risk? Is the Pope Jewish? Of course not, unless you live in la, la land.

Support provided for RBS in the crisis was 211% of Scotlands GDP. The asymmetries in the positions are glaringly obvious to all but yS spokesmen. It's embarrassing for them to pretend otherwise.

I get the impression that AS is [s]at best being disingenuous, at worst a downright liar.[/s] a politician

FTFY

Ach, you're right. I give up. Scotland may have a better GDP per head than the rest of the UK, lower unemployment, and much larger natural reserves, but it's all too difficult for us.

You are missing better access for MTBers Ben !!!

bencooper - Member
Ach, you're right. I give up. Scotland may have a better GDP per head than the rest of the UK, lower unemployment, and much larger natural reserves, but it's all too difficult for us.

But you don't have a currency..... I'm no expert but I think that might be important for the economy... I wonder how much your GDP per a head could could fall.....

Ach, you're right. I give up. Scotland may have a better GDP per head than the rest of the UK, lower unemployment, and much larger natural reserves, but it's all too difficult for us.

What they are saying is you cant use the pound to do so.

If you want to be independent, why still have close links to the rUK by having the BoE run your Monetary policy. Surely you want to control that yourself, rather than being told what to do by London?

Would it be churlish to quote JM Keynes?

He who controls the currency, controls the country

[quote=bencooper ]Scotland may have a better GDP per head than the rest of the UK, lower unemployment, and much larger natural reserves

When you put it like that, I can't imagine why anybody is worrying about stuff as trivial as which currency to use.

teamhurtmore - Member
Would it be churlish to quote JM Keynes?

That's why many of us are happy to see no currency union.

@bencooper - I don't think you want Scotland to turn out like Iceland financially. Scotland doesn't have the scale to stand alone on a variety of fronts but most importantly economically and financially. If she becomes independent she will have to join the euro. There is no way an independent Scotland could have a credible central bank, the country is just too small.

In addition the administrative infrastructure that Scotland would have to duplicate as an independent country would be a huge burden financially on what is a relatively small population and tax base. Independence would be a huge financial bonus for the politicians.

The notion that the Bank of England has a huge pile of assets to which Scotland could take a share is incorrect. The strength of the BoE comes from the fact it's supported by the UK economy and tax base. Scotland cannot walk away without a share of the debt and they know it, the UK would not allow them to become independent on that basis, it is not a unilateral decision for Scotland to make.

It's a pity financially that Scotland didn't have this referendum some time ago as the UK's two largest financial failures in the credit crises where RBS and HBOS. That's a lesson for Scotland in how "wannabe" institutions tried to play in the big leagues and took too many risks and a real beating.

Ach, you're right. I give up. Scotland may have a better GDP per head than the rest of the UK, lower unemployment, and much larger natural reserves, but it's all too difficult for us

Ah good, so you've realised how good you've got whilst being part of the UK, glad that's settled then.

[b]Chew[/b]
No ones saying that Scotland couldn't be very successful being independent.

When you put it like that, I can't imagine why anybody is worrying about stuff as trivial as which currency to use.

Absolutely. So, if you choose to leave, take your share of the fiscal responsibilities (up and down!) and feel free to set up your own currency. Given how rosy it sounds economically, I'll wager it'll overtake the dollar or RMB as the world's leading currency very soon. 😉

The FT editorial sums it all up pretty well today

epicyclo - Member
teamhurtmore - Member
Would it be churlish to quote JM Keynes?
That's why many of us are happy to see no currency union.

And for those of you who are honest about this - full respect.

Scotland may have a better GDP per head than the rest of the UK, lower unemployment, and much larger natural reserves

If that were truly the case, why on earth would you want to keep Sterling like a millstone hung around your neck?

It would be interesting if this was reversed. Can you imagine the stooshie if Osborne had said: "in the event of independence, Scotland has to agree to currency union."

Can you imagine the stooshie if Osborne had said: "in the event of independence, Scotland has to agree to currency union."

You might be on to something there:

Chew
No ones saying that Scotland couldn't be very successful being independent.

Actually I'm saying that. It would be too small a country.

I don't agree, despite my previous posts I do think that Scotland could make it as an independent country . . . . . . eventually.

The reality I think for anyone tempted to vote YES though is not to expect a smooth transition, and certainly don't believe what the SNP would like you to believe in their White Paper.

Scotland's independence will cause huge internal turmoil, a potential large temporary loss of GDP, taking on a staggering amount of debt to restructure, a Scottish internal power struggle, a huge amount of uncertainty, potential loss of external investment and confidence, plenty of currency and financial problems etc, etc.

To add that historically, uncertainty and turmoil in any country/economy normally has the knock on effect of the rich getting richer, and the weak getting trampled on.

This will all be resolved though with enough time. But it's not going to be all rosy in a year or two - it will take at least a generation for things to settle down, a generation before the country is truly stable.

So does the Scottish population have the stomach to sacrifice the comfort and stability in their own lives, to put their own lives on hold for future generations and the greater long term cause?

Rebel +1

There is plenty of evidence to support Scotland's ability to succeed as an independent country.

Exchange rates can vary, but probably not all that much and not quickly. £/€ hasn't shifted anything worth bothering about for years.

A 9c swing from£1 =€1.24 to £1=€1.15, Oct '12 to Feb '13 (nearly did for my employer last year. The rate has gone up to £1=€1.21 a couple of weeks back and dropped back a couple of cents since then.

You may want to rethink that.

(We're too small to forward buy options for clarity).

It's a pity financially that Scotland didn't have this referendum some time ago as the UK's two largest financial failures in the credit crises where RBS and HBOS. That's a lesson for Scotland in how "wannabe" institutions tried to play in the big leagues and took too many risks and a real beating.

Exactly, during the crisis the Bank of England issued guarantees of around £200billion (Yes, Billion) in respect of RBS. That is almost double Scotland's GDP for a whole year.

[b]If[/b] Scotland goes Independent, and [b]if[/b] they retain the pound, without the Bank of England acting as guarantor (Lender of Last Resort) then the financial sector will relocate, probably to London. How could they not?

Wee eck's language - three Bs BS aside! - is quite telling.

So this week we have gone from,

Early in the week: UK parties have not ruled out the pound = "proof that Scotland WOULD keep the pound."
Yesterday: UK parties rule out the pound - "bullies"
Today: "err, the Scottish people do have other options"

True but the Fiscal Commission, whose advice he is relying on, examined different options (but crucially and sensibly ruled out the panama solution!) but only gave him one plan. At the moment, he had no plan C. Hence Stiller's comments.

And we haven't even started on pensions and defence yet!

So the Scots are meant to take a risk on this chancer. Amazing, we all deserve better! 😉

RBS and HBOS are not 'Scottish' banks. They are very much huge multinationals that happen to have Scotland in their name.

As for Iceland, at least they are doing something about about the ****ers who ****ed up and throwing a load of them up in front of a court where as the UK just carries on as normal and tells them to reduce their bonuses for a bit.

So were they/are they only Scottish when the sun is shining. Don't forget wee eck's profound comments in 2007

We are pledging a light-touch regulation suitable to a Scottish financial sector with its outstanding reputation for probity, as opposed to one like that in the UK, which absorbs huge amounts of management time in 'gold-plated' regulation.

And the same guy who pledged his support for one of the great banking M&A disasters of recent times. So the Scots are meant to take a risk on this chancer?

Selective memory,so remind me; was that part of a salmond speech against a Westminster push for tighter regulation of banking? Or were they pulling the wool over every bodies eyes back then?

Surely the point is that no matter how inadequate UK regulation was at the time, Mr S saw even that as excessive and was calling for even [i]less[/i] scrutiny than was being applied in 2007...

Junkyard et al, quite interesting summary of the Treasury guarantee given over existing UK debt, which explains the rationale for taking the action:

http://ftalphaville.ft.com/2014/02/14/1770832/how-scotland-really-lost-sterling-union/

Rebel12: I really struggle with points of view like that. I [I]could[/I] decide to sell my car and buy a donkey, but it would feel like cutting my nose off to spite my face.

I'm still not convinced that the Scottish independence movement isn't just 20% old school nationalists with an unpleasant side in bigotry, and 80% people who just hate the Tories?

Your memory is clearer than you make out. The comments speak for themselves.

But when the sun went in, his tone changed didnt it:

The people responsible for RBS...were the London ([i]deliberate choice of words as usual[/i]) Treasury ([i]strictly not true, wrong body by when do details matter with wee eck[/i]). Unfortunately, they were also responsible for regulating, or at least misregulating, the financial sector as well ([i]coveniently or otherwise leaving our BoE and FSA[/i]). I'm afraid people ([i]you know the ones behind the gold-plated regulation that absorbs so much time[/i]) have to take responsibility for the past mistakes they made.

Talk about selective memory! So the Scots are meant to take a risk with this chancer?

So to flip your coin l could,if arsed, find speeches of a similar vein from the politicians you would have continue to rule my country,with the added bonus of not caring about Scotland,which even you would have to admit Salmond does. Not selling much with that one,are you?

You could but it would be a fail. In his own words he argued that the people who failed us (and whose quotes you are free to find) were far too strict in the first place. Doh.....

So the Scots are meant to take a risk with this (fair weather) chancer?

First and foremost he cares for himself. If he really cared for Scotland he wouldnt talk such BS.

The only defence for Salmond on this subject is that light-touch regulation wouldn't have made much of a difference; the uk regulation was inadequate and outmaneuvered anyway. So the best he can say is that he'd have made the same call everyone else did. He's fairly unusual in that he's admitted he was wrong, but what's that worth really?

I would say to anyone feeling too pleased about that, that they're welcome to show me the alternative leader who would have led us to a different end. While condemning Salmond you condemn all of his opponents in the same breath.

For anyone in the Yes campaign to claim they'd have prevented the banking crisis is absurd. The truth is it made idiots of the majority of so-called experts in and out of government, few people get to be smug about it.

([i]I[/i] get to be smug about it because I always said predictive economics is as reliable a science as reading entrails. But that's not totally constructive- just because I was right to throw poo, doesn't mean I'm not a poo throwing monkey)

Course, those same experts and institutions are still calling the shots and making predictions and assigning credit ratings with the same confidence as they did before they turned out to know ****-all, but that's another thread 😉 Though, it is those same experts making judgements over Scottish independence, so perhaps not. Bring forth the entrails!

So the Scots are meant to take a risk with this (fair weather) chancer?

First and foremost he cares for himself. If he really cared for Scotland he wouldnt talk such BS.

THM, couldn't agree more - the man's as slippery as an eel dipped in olive oil. Far far worse even than what you'd typically expect from the average politician! You get the feeling he'd say anything to achieve his ambition of being president of Scotland.

Unlike CMD or say Clegg - now those are virtuous politicians who do what they say.
I think we can all agree we dont trust any politician.
I fail to see why wee eck gets this much grief from folk tbh.
He is no different from any other

I don't agree, despite my previous posts I do think that Scotland could make it as an independent country . . . . . . eventually.

I dont think anyone thinks it will be seamless but a generation is OTT.

Junkyard et al, quite interesting summary of the Treasury guarantee given over existing UK debt, which explains the rationale for taking the action:

the financial sector will relocate, probably to London. How could they not?

I need to register and , as it murdock, I decline

It's not actually

I stand corrected
Ta

I shall register and read

The FT stuff is not new (but being alphaville they try to make it a bit edgy!) It's the point I made earlier about how this actually works in practice. It does however correct the idea that somehow the existing debt is carved up and some bond holders would own rUK debt and others scottish debt. That is an absurd notion.

McCrone wrote about this at length in his book (still IMO the essential reading not the BoD) - this debt will always be owned and honoured by rUK. Scotland will pay a financial compensation in proxy. That bit is simple,

But the FT is correct on the bargaining power though.

If Scotland goes Independent, and if they retain the pound, without the Bank of England acting as guarantor (Lender of Last Resort) then the financial sector will relocate, probably to London. How could they not?

It does seem that the currency issue is a big deal on stw, and even to Alex Salmond but it doesn't seem to be such a big deal to the people of Scotland.

Only 3% and 2% of those polled respectively said EU membership or currency was most important to them in deciding how to vote in the referendum yet our politicians see these issues as priorities.

It will be interesting to see the opinion polls in a few days time but my personal opinion is that Mr Osborne has succeeded in irritating quite a few people who were going to vote no.

I am sure that you are right Gordi. As always, when grief set in there are the classic stages:

1. Denial: been there for a while (the WP is not a BOD)
2. Anger: his supporters who swallow the bully idea are here now as you indicate (Oh F it is)
3. Bargaining: where AS finds himself this morning (can we go back and start again)
4: Depression: coming soon when the truth sets in (bllx, screwed the vote up again)
5: Acceptance: sept onwards..... 😉 (pint of 90/- please Archie)

Bargaining would be exactly where Alex Salmond would have hoped to be at this stage. I dont think Messrs Osborne and Cameron planned to be pre-negotiating though.

Anger: his supporters who swallow the bully idea are here now as you indicate

Mr Osborne has succeeded in irritating quite a few people who were going to vote no.

rebel12 - Member
...So does the Scottish population have the stomach to sacrifice the comfort and stability in their own lives, to put their own lives on hold for future generations and the greater long term cause?

That's exactly why I will be voting YES.

I expect an initial period of uncertainty, mistakes, and there will be some who do well out of it and others who take a hit. The beauty is that we will be able to get rid of non performing politician because our system will be democratic and more answerable to Scotland's needs. (ie not outnumbered by SE English voters needs)

There's a lot of playing the man on this thread - all the Alex Salmond jibes. That's a waste of time.

A couple of points about that - one of the things I got taught at school a long long time ago is that when you see one side using the play the man scenario, that side is losing because they obviously don't have valid answers. So even if you haven't got the answer yourself, you know to avoid that side.

The other point is that Salmond is unlikely to be the Prime Minister of Scotland 2 elections in.

The SNP is only a small part of the independence movement, there's plenty of people from other parties involved who are temporarily aligned with the SNP, and after independence there's no need to vote SNP any longer.

Mind you the way the LibDems and Labour are behaving, they may be on the nose for a long time - this is a country where grudges are held for hundreds of years - so unless there's a cull at the top of those parties, they may be gifting the SNP a few bonus elections.

That's your own affair - as it should be. Far from revelling in Salmond being caught offside in the currency affair, i really don't care about whether it makes him look bad or not. My only interest is that the UK does not enter an agreement so fraught with risk for so little potential return as a formal Currency Agreement with Scotland. What you do after that is of little concern to me.
I will be frank, i want Scotland out of the Union. If the NO vote wins in September i fear this issue will rumble on and on, creating continuing uncertainty in the UK & on the wider markets. It wont do the UK any good so its best if Scotland goes now.
I truly believe Scotland can & will be a successful & vibrant Nation & i look forward to seeing that happen.
So long as my taxes aren't backing up the gambles of a Scots Govt/banking system I'm all for it.

It does seem that the currency issue is a big deal on stw, and even to Alex Salmond but it doesn't seem to be such a big deal to the people of Scotland.