[Closed] Osbourne says no to currency union.

So that's about £90 billion of debt then as I understand it?

Yup, something around that.

Indeed - however for some strange reason the SNP want to use an entirely different measurement when calculating the division of the oil assets...

Surely not?!? 😉

I know it has been said but i need it explaining- it may be clear to an economist but it is not clear to the rest of us who are not economists, actually i may be overstating - its not clear to me.

Goggle is not helping anyone got a simplish link ?

I also need to know why rUK have gone to such lengths to keep and retain something that has no value.

Its an intangible asset as far as i can tell or they would just happily give it away as trash as it is valueless.

For (hopefully) the last time - a currency (1) is NOT an asset and (2) it MUST hold value. Saying it is an asset with no value is like saying the sun rises in the west and sets in the east. It doesn't and this is clear as day!!
If it fails (2) you would not be able to issue debt in it. Simple. Scotland will issue its own debt if independent, hence it has to establish a "hard" currency ie one that holds its value.

Oh I understand THM, I think, I'm just curious to hear other POVS..

Indeed - however for some strange reason the SNP want to use an entirely different measurement when calculating the division of the oil assets...

You're confusing an asset and a natural resource. Want to annex 90% of our peat too?

From an economics point of view there are two ways to run an economy
Fiscal policy (Tax and Government Spend)
Monetary policy (Supply of money - mainly interest rates)

For a currency/economy to work you need these two to work in partnership. Monetary policy for the pound will be controlled by the Bank of England which in turn needs to be linked to Government spending. If this is being set by two different countries this will not end well.

We've all seen this in the Euro Zone. The European Bank setting Interest rates (mainly for Germany's benefit) and each country setting there own Fiscal plans (Ireland/Greece) and we all know how thats working out.

It would be in Scotlands best interests to have its own currency. It can then set its own interest rates aligned to its own economic situation (boom/recession) rather than having to listen to London.

I don't think there's any big problem with a Scotland establishing our own hard currency, we just want 1/9th of the Bank of England to do it.

Or it perhaps makes more sense for everyone if we continue to share that.

bencooper - member:

You're confusing an asset and a natural resource. Want to annex 90% of our peat too?

Ahem:

bencooper - member:
[b]Everything[/b] gets shared that way - assets, liabilities, things where no-one can agree if they're assets or liabilities, [b]everything. It's the only fair way to do it.[/b]

😆

Okay, I want 9% of your front garden 😉

Scottish people contributed 9% of the assets of the UK, and we ran up 9% of the debts. In what way did the rest of the UK contribute to the oil reserves? They're just there - no rUK taxpayer put any money into creating them.

I also need to know why rUK have gone to such lengths to keep and retain something that has no value

Thats the reason why AS wants the pound. A Scottish dollar wont be as strong/stable, which risks the economy.

Junkyard, pretty much all here:

http://en.wikipedia.org/wiki/Monetary_policy

You're welcome, as long as I get 91% of yours 😆

Like you said ben, [i]everything gets shared that way... everything. It's the only fair way to do it.[/i]

Unless folk want to delve into the murky world of central bank accounting, the simplest advice is to realise that whether a currency is an asset or a liability is in this context a non-question. (It is in fact either a liability or neither (odd I know) but this will get far too much into detail.)

One might as well ask is a Ferrari a fast train or a fast airplane? It's a non question, like what happened to the missing $. Remember when yS use assets and liabilities the amber/red lights should simply be flashing. It's a dead giveaway.

Cheers but I get monetary policies - one advantage of doing A level economics in Thatchers Britain - I earned a highly credible B with near zero effort.

Cheers and i will read but not getting why it is not an intangible asset tbh/has no value - quick skim gave little insight but I will go read it all.

If you have trust in a currency then that adds value to it I assume
Clearly the pound has this and therefore some value or they would not care who has it and clearly they do care.
Are we really meant to believe they are arguing over something that has no value?

the divorce is going to be worse than we feared then if they are doing this now.

I still don't really understand why AS so badly wants his country's economic policies to be run from London after this vote.

Very odd.

Surely if Scotland wishes to be truly independent then they would also not want to have any financial tie to the rest of the UK (or whatever it would be called if independence went ahead)?

Osbourne and the rest may be using this issue as a tactic to sway voting...but it appears to me Alex Salmond wants his cake and to eat it.

IMO if you want freedom then fine but go the whole hog and use Stirling or the Euro.

QT drink bingo for later

1. "assets" in relation to currency - a whole pint/glass
2. "Dredging" - a half

sore head expected in the morning!!!

Can I ask a simple question here? In the theoretical Scotland-with-no-currency-union, Scotland could presumably expect to take a share of the Bank of England reserves as part of the divorce settlement... So when people talk of a Scotland without a lender of last resort, as they'd have no access to the Bank of England, what is it that prevents Scotland from taking that resource and establishing a federal reserve to fulfil that role?

Can I ask a simple question here? In the theoretical Scotland-with-no-currency-union, Scotland could presumably expect to take a share of the Bank of England reserves as part of the divorce settlement... So when people talk of a Scotland without a lender of last resort, as they'd have no access to the Bank of England, what is it that prevents Scotland from taking that resource and establishing a federal reserve to fulfil that role?

This works fine for America and Canada BTW.

IANAE.

Northwind - Partly because given the size of financial services to the Scottish economy, the potential exposure to another banking failure (lender of last resort role of a central bank) could bankrupt the entire Scottish economy.

For example, during the financial crisis, UK govt had to underwrite a 45 billion pound loan to RBS

Robert Peston reiterated the point today made by Macpherson, that the Scottish Economy & taxpayer base is simply too small to bail out Scotland's giant banks, so the solvency risks would remain with the Westminster Govt & the UK taxpayer. As the UK,economy is 10x the size of Scotland's then a Scottish bail out of the UK is highly unlikely.
In the event of currency union, which is why Westminster rejected it - UK voters aren't going to let that bird fly.

mrlebowski - Member
"Yes, but in case you haven't noticed, England is not the UK either."
So you're advocating the dissolution of the pound then?

Like many I don't care what currency we use. I think Salmond is probably happy to have this out of the way - he is a canny operator. Now Project Fear can't validly criticise him for putting forward an alternative currency.

I'd prefer not to have any of our economic decisions made in England after independence, so I'm quite happy to see the £ go.

muddydwarf - Member

Robert Peston reiterated the point today made by Macpherson, that the Scottish Economy & taxpayer base is simply too small to bail out Scotland's giant banks,

Giant banks plural? Lloyds is not a scottish bank last I looked and Clydesdale are certainly not a giant... And we're assured that all the hard work of the banks and treasuries should prevent a similiar gigantic bailout for RBOS.

His words not mine - assuming he means RBS & HBOS. Lloyds are now separate from HBOS aren't they?

It was LloydsTSB. They are now split.

I think the real point here is not the assets and liabilities (reserves and debts) of the UK, but the control of the central bank (Bank of England).

The two key aspects of "the pound" that the SNP are keen to keep as part of the BOE are: acting as lender of last resort (bailing out RBS, HBOS etc.), and the control of interest rates via the monetary policy committee. Unfortunately, the BOE is the central bank of the UK. You can't divide it up: it's mandate is to act in the best interests of the UK as a whole, not some population weighted average of England, Wales, Scotland and NI.

It would be feasible (IMO, but I'm not an expert) to divide up BOE reserves and UK government debt after independence, Scotland could start their own central bank and control their own monetary policy. An agreement to amend the fundamental mandate of the central bank to act in the best interests of not just the UK, but also Scotland is another thing entirely though. How would it even work? Would there be a population weighting for the relative harm or benefit of changing rates etc?

In what way did the rest of the UK contribute to the oil reserves? They're just there - no rUK taxpayer put any money into creating them.

So revenue from North Sea oil makes up just 1.5% of UK tax revenue? Might as well just throw the Scots a bone and give it all to them if it will stop the whinging. 4/5ths are already gone and it's not going to last that much longer anyway and will become less and less important as time progresses. We're at the start of a huge global shift away from fossil fuels and the UK is already investing heavily in Nuclear power as we speak.

NW - perhaps you are forgetting that dear Gordi forced Lloyds to buy the glorious HBOS and the £37bn bailout thrown in? Plural was correct.

I'd prefer not to have any of our economic decisions made in England after independence, so I'm quite happy to see the £ go.

I'm not so sure England, NI & Wales would be so keen to see it go though...

Shouldn't those who live there have a say on it? Or at least those who represent them?

So revenue from North Sea oil makes up just 1.5% of UK tax revenue? Might as well just throw the Scots a bone and give it all to them if it will stop the whinging. 4/5ths are already gone and it's not going to last that much longer anyway and will become less and less important as time progresses. We're at the start of a huge global shift away from fossil fuels and the UK is already investing heavily in Nuclear power as we speak.

Most of us know and accept that the best of the oil money has gone, but we might as well try and get the benefit from the rest of it while it's sill there. Even without the oil money Scotland would still be viable financially. GDP without the oil money is not drastically different from rUK, so it's not really a problem.

"Bluff, bluster and bullying" - wee eck's response tonight according to BBC news. He must have been looking in the mirror.

The Bank of England's balance sheet consists of assets - securites, repo and other advances to banks etc, gold etc, loans to government of £400 billion, it has liabilities of £400 including notes issued the pounds in your pocket and borrowing (dominated by its Asset Purchase Faciltity). Its net assets are £3 billion so on your argument you would be entitled to 9% of these which would be £270 million. You've then got your share of the pound and the reserves - well done.

mrlebowski - Member
"I'd prefer not to have any of our economic decisions made in England after independence, so I'm quite happy to see the £ go."
I'm not so sure England, NI & Wales would be so keen to see it go though...

I meant in Scotland. Obviously it wouldn't disappear from England.

BTW it's perfectly understandable that England and its territories wouldn't want an independent Scotland having influence over the £ after independence.

The intangible of sterling it is the fourth most traded currency in the world, that means the frictional costs of exchanging it are relatively small, because they is so much liquidity. These don't belong to the country, they belong to the holders of the currency at anyone time. It will also be held by other central banks as a reserve currency though in no where near the amounts they will hold USD or even the EUR. A new Scottish currency wouldn't be so widely traded so the costs of exchanging it will be higher. As a result, most "cross border" businesses would probably use Sterling for transactions.

* Oh and sterling predates the Act of Union.

Wee eck on Newsnight apparently. See if he answers the questions better than dear Nicola. My bets are on maximising the three Bs but no plan B. 😉

I can't bear to watch it. Can't afford a new television or window with child no. 3 due any day. Need to save money for passport applications. I am sure he will smirk his way through it. He always does.

Two pints down from Newsnight, damn there's another and another .....bllx 4 pints in 20 seconds 😉

Wonderful subterfuge from AS. Not a single answer.

And Plan B? Nowt.

Hic, Hic!!!!

And a final two pints for the road!!!

Interesting to see Henry McLeish backing the bullying claim, from a unionist perspective. And also interesting to see the genius Balls declare that Scotland "will not be able to keep the pound" , you can never tell with him if he's deceiving or just a spanner.

teamhurtmore - Member

NW - perhaps you are forgetting that dear Gordi forced Lloyds to buy the glorious HBOS and the £37bn bailout thrown in?

Not at all, not sure why you'd think that. But this is past. (for a couple of people up the page- no, HBOS is still wholly owned by Lloyds)

I was a wee bit guilty of asking leading questions looking for a specific answer, which Ninfan was kind enough to give. Assuming for the moment that he's right, and Scotland couldn't afford to keep RBOS afloat in another crisis... We know the idea of a "Scottish" bank is basically ridiculous, and if RBOS were to collapse, the consequences would be international, and a disaster for the RUK. All the things that make it "too big to fail" today remain absolutely true from the RUK perspective the day after independence.

So, given that... Obviously it's in the UK's interest for RBOS to be secure. Which they can best achieve with cooperation. The No campaign would like us to think that currency union is all one way benefit for Scotland, it's the same tired "free meal" line.

IMO Salmond's making the exact mistakes that Project Fear makes every day, which is kind of bizarre- he's now fighting a negative campaign on the subject, "Oh we're being bullied", rather than fighting the positive campaign- they seemed to start out on that tack but I don't hear it now.

He might, for instance, point out that Osborne is making this declaration on behalf of the UK government, on the advice of the UK government, given by a man employed by the UK government and knighted by the UK government... Always nice to be impartial eh but at least our tax is being spent well.

Nice point mefty the pound is an English currency that the Scots chose to use. The pound dates back to eighth century and the Bank of England pre-dates the union by a decade. If they leave the union then they walk away from the pound and the Bank of England. If the Scots create a new currency it will not be legal tender in the UK and as we are there largest trading partner it would severely affect Scottish businesses. Salmond needs a currency union because there is no alternative for an independent Scotland. Cameron has Salmond by the balls!

4 pints in 20 sec... chapeau world class drinking thm , but please be careful when posting and don't get me mixed up with Mr Brown. "Dear Gordi" 😆

Gordi, I was flat on my back after Newsnight. Had to stop before QT. 😉 Poor quality debate IMO. Who is this woman from UKIP?

I did almost change that "Gordi" for that very reason! 😉

There's a woman in Ukip! Does Nigel know?

Got to laugh at people who would usually criticise everything Osborne does and says due to his lack of credentials and economic policy suddenly very happy to take what he's saying as gospel....

I just watched the BBC interview with Nicola Sturgeon. 11 minutes long and she did not, indeed would not, answer one question put to her. She squirmed, changed the subject, answered the questions she wanted to hear and generally embarrassed herself.

If anyone thinks the SNP have a plan B or a plan C that interview is well worth watching.

My main concern is that our flag will look crap if Scotland leave.