Osbourne says no to currency union.

She mentioned that yes, but at no point committed to that being their plan b.

That’s because the commentators are trying to get her to commit to a plan b, which would then be taken as saying that it is going to happen, where as she is trying to maintain that: just because Gideon/Balls/Alexander say that there wouldn’t be currency union does not make it so.

Doesn’t anyone imagine for one moment that a bank would remain domiciled in a country without a lender of last resort

They better get out of the UK sharpish, then – the UK couldn’t bail out British banks without help from the US Federal Reserve.

MMM just read some more on this

It may indeed not be a bluff

http://www.bbc.co.uk/news/business-26170638

Still not sure anyone can say with any confidence what will happen but yes he has a hard sell to convince rUK.

And as Chancellor in a UK Labour government after the general election, I simply could not support or recommend to Parliament that we form a currency union with a separate Scotland.

If he was, and if he did, then hopefully there would be plenty of MPs in Parliament that realise Ed Balls is the last man on earth you should take advice from on an economic decision that big.

Ben, not so fast. They bailed out the US bits and in response they are now requiring US subsidiaries to be independently capitalised. It’s a major headache for European banks now. At least in some quarters, the lessons of the crisis have been learned.

kelvin – Member
just because Gideon/Balls/Alexander say that there wouldn’t be currency union does not make it so.

Are you suggesting that UKIP will win the next election. Quick where’s my passport…..

No teamhurtmore, but I am suggesting that what these people say now is not a good guide to what they would actually do after a YES vote. There’s also every chance that none of these three will have as big as say in the decision as they suggest or think.

I was joking!!!

But the serious point, is that this is not the unilateral decision that the SNP like to pretend it is. And it is very, very unusual for civil servants to be so clear, so far in advance in what their advice will be commeth the dreaded hour!

And the advice:

If you follow Treasury advice and this week rule out a currency union in the event of Scottish independence, you can expect the Scottish Government to threaten not to take on its share of the United Kingdom’s debt. I do not believe this is a credible threat. First, the sooner an independent Scotland established economic credibility, the better it would be for its economic performance. An extensive wrangle about its share of the debt would increase uncertainty and hence its funding costs. Secondly, the debt is one of a number of issues which would have to be settled post independence, where the new Scottish state would require the cooperation of the international community including the continuing UK.

There you have it. The advice is call their bluff.

Can we not just sell or privatise Scotland as some kind of theme park. Sort of sell it to the Scots somehow???

You could have the

Outdoors Mountain Zone
The Nessy Zone
Whisky & Buckfast Bar
Nuclear Sub World – Life in the Faslane
Photo with Rab C Nesbitt for a $1 Braveheart Dollar

Bit like selling the Royal Mail really

Can we not just sell or privatise Scotland as some kind of theme park. Sort of sell it to the Scots somehow???

Quite a bit of the highlands is already like this. Although in this theme park you get a gun.

Something that irks me about the YES campaigners.
This is all about the right of Scotland to Self Determination, a fine and noble concept we can all agree on.
So why, when the UK exercises that very same right – the right to determine the financial path that is in the best interests of the country – are Scottish toys thrown out of the pram amid screams of bullying?

As pointed out before the rUK has an election in 2015. A mandate for a currency union needs to be obtained then.

Getting the rUK to give up some sovereignty in these circumstances is going to be challenging.

Hence I don’t think it will happen

THM – apparently, regardless of the argument over necessity of joining the Euro – it would be impossible for Scotland to just use the Pound as a base currency and gain EU membership, since that would leave them without a central bank!

ownership of CB is required for full EU membership due to the European system of Central Banks, according to the treaty on the functioning of the EU – Luxembourg had to create one in 1998 to fulfil membership criteria.

There goes plan B 😆

Is that so – I am little hazy on the technicalities of EU membership for obvious reasons! But that makes sense. They also need their own regulator for € entry. Equally, the lender of last resort is so fundamental which is why no one seriously gives the idea much credence outside idle gossip/speculation.

I am not sure that this necessarily kills plan B – it just has to be determined how an independent currency would work and how the infrastructure that supports it would be put in place. The SNP have had years to think about this, so it will be easy to roll out. Their advisors have also done plenty on it. Failing that, my fees are really quite reasonable!?! But it pretty simple really and indeed not a bad option. As the NIESR conclude, “The Scots pound option has the highest transaction costs and least assistance with financial support but also the greatest degree of flexibility in monetary, exchange rate and fiscal policy terms.”

This all reminds me of when M&A deal fever sets in with companies. At the start, they say we want to acquire a company to fill a square hole. Sadly, there are no square bricks available. But there is a rather pretty triangular one. Cue sensible men and women now trying to explain how a square hole is actually triangular or that a triangular brick is actually square. When this all fails, someone just goes “sod it” and tries to force the said brick into the said hole, breaking everything in the process. For deal fever, think referendum fever……

…as I mentioned before, all very funny except for the fact that the outcomes are very serious in this case. Not that dear Nicola seemed to get that.

Lots of broadsheet/news media comments on how a so-called “canny politician” has allowed himself to get boxed in so badly. Welcome to the big boys world……

AS and NS will have their day again though, these things are never smooth and they will be stinging from today. The bully card will help them through in the ST but they need a new LT answer and quickly.

Something that irks me about the YES campaigners.
This is all about the right of Scotland to Self Determination, a fine and noble concept we can all agree on.
So why, when the UK exercises that very same right – the right to determine the financial path that is in the best interests of the country – are Scottish toys thrown out of the pram amid screams of bullying?

Because, basically, the assumption seems to be that the pound isn’t ours already. It is – it belongs equally to everyone in the UK. Osborne is saying we can’t have something that’s already ours. Now this is nothing new – this is the man who presided over selling our Royal Mail back to us – but it seems a bit of a cheek.

The second factor is that the Westminster government said that the referendum was a matter for the people of a Scotland. It was supposed to be a discussion between the Yes and No campaigns with Westminster stating out of it until there’s a result, then negotiations could begin about how independence would come about if that’s what the people of Scotland voted for.but now we have all the Westminster parties jumping in on the no side.

The interesting thing is that everyone’s at the bridge burning stage. The Lib Dems are already dead, but people in Scotland won’t forget Labour standing side-by-side with the Tories.

it belongs equally to everyone in the UK.

Therefore, it does not belong to any country not in the UK.

No one is stopping you using the pound – the UK is simply protecting its interests in not entering a formal currency union.
By all means use the pound as a currency, just don’t expect UK taxpayers to be your bail out option. That surely cannot be hard to understand?

Because, basically, the assumption seems to be that the pound isn’t ours already. It is – it belongs equally to everyone in the UK. Osborne is saying we can’t have something that’s already ours.

But does it belong to Scotland? Surely Scotland has the pound by virtue of being part of the UK? If Scotland leaves should it not ergo give up the pound & have its own independent currency? It does seem rather like the Yes contingency want their cake & eat it?

Ben:

No it doesn’t – thats the point.

Why, because while the vote is for Scots, the outcome affects us all. Therefore it would be naive to think that rUK would be idle and passive bystanders

Sounds like a threat 😉 !!

I admit that with yS incorrecly framing the issue as an assets/liability question its bloody confusing (deliberately), but what they are doing is simply an clever version of the missing dollar trick

Three guests check into a hotel room. The clerk says the bill is $30, so each guest pays $10. Later the clerk realizes the bill should only be $25. To rectify this, he gives the bellhop $5 to return to the guests. On the way to the room, the bellhop realizes that he cannot divide the money equally. As the guests didn’t know the total of the revised bill, the bellhop decides to just give each guest $1 and keep $2 for himself. Each guest got $1 back: so now each guest only paid $9; bringing the total paid to $27. The bellhop has $2. And $27 + $2 = $29 so, if the guests originally handed over $30, what happened to the remaining $1?

All smokes and mirrors

Scottish Independence is a matter for Scotland alone – entering into a formal currency union advocated by a newly Independent Scotland is an entirely different matter and one which concerns every citizen of the UK, so the UK party leaders are entirely within their remit to both comment on & announce policy on the subject.
When you propose currency union its not just about you and your demands anymore.

CaptainFlashheart – Member
“it belongs equally to everyone in the UK.”
Therefore, it does not belong to any country not in the UK.

Yes, but in case you haven’t noticed, England is not the UK either.

Yes, but in case you haven’t noticed, England is not the UK either.

So you’re advocating the dissolution of the pound then?

Therefore, it does not belong to any country not in the UK.

And as scotland are it it partly belongs to them

or if you prefer

So the debts are not theirs either

And it is very, very unusual for civil servants to be so clear, so far in advance in what their advice will be commeth the dreaded hour!

That is the thing that makes it very real IMHO
What the politicians say can be taken with a pinch of salt/electioneering/cynicism that they dont mean what they say

The CS is impartial and has to be trusted
On the debt issue expect scotland to argue as I just did with the Cpt.
rUK cannot have it both ways – keep the good stuff for themselves but share the crap equally. The independence lot cannot do it either…like all divirces it will be messy, vitrolic and leave an aftershock for years

Annex A of today’s report

A.1

The Scottish Government’s White Paper, Scotland’s Future: Your guide to an independent Scotland, states that “the pound is Scotland’s currency just as much as it is the rest of the UK’s”. The Scottish Government’s Fiscal Commission proposed that an independent Scotland seek to retain the UK pound as part of a formal monetary union with the rest of the UK. The Cabinet Secretary for Finance in the Scottish Government, John Swinney MSP, has argued that the Bank of England is “as much our bank as it is anybody else’s”.

These assertions are premised on a misunderstanding of the nature of a system of currency and a flawed analysis of the legal position of the UK pound and the Bank of England. Members of the Scottish Government, have in their public statements, continually conflated the UK pound as a currency with the issue of assets and liabilities, even suggesting that an independent Scottish state would refuse to take its share of liabilities if the continuing UK did not agree to share the UK pound as part of a currency union….

…It is important to be clear what the UK pound as a currency is and why it is not an asset. A currency is a system of exchange, a unit of purchasing power that works when others recognise it as having value. Currency does not have to be the coins or bills which are used by most states; it could be anything that people agree represents value. The UK pound is underpinned by a legal, institutional and administrative framework which enables it to function as a medium of exchange, a store of value, a unit of account and a medium for deferred payment.

It goes on, but you get the legal gist. Page 52 onwards if you want the nitty-gritty!

Like the word “bully”, the more yS use the notion of assets and liabilities, the more you know they are flawed in their thinking or simply being deceitful. My money is on the latter. But lets see…..

“The lib dems are dead. People in Scotland will not forget labour standing side by side with the Tories.” If we are independent is there any point of a general election? I sense 99% approval polls for Dear Leader.

Ha THM you beat me to it – the pound is not an asset, nor any medium of exchange.

Difficult to explain why unless you include basic economics and central bank theory, but people need to understand this as makes most of the comments on this thread and elsewhere completely irrelevant.

Therefore, it does not belong to any country not in the UK.

Does that logic apply to other things that belong equally to all UK citizens, like foreign currency reserves, military assets, embassies, etc?

Sounds a lot like you’re saying the people of Scotland, who helped pay for these assets, shouldn’t have a share in them.

As an economist I have stated this several times bainbrge and generally get flamed for telling the truth. Its quite funny. But the sad thing is that AS is also an economist and knows this as well and you and me. Hence the only conclusion is that he is being deliberately deceitful.

Not sure about dear Nicola, she is a law graduate. GO read history but at least he has listened to his advisors!!!

Genuine question. What is it about the pound that SNP say makes it an asset?

Genuine question. What is it about the pound that SNP say makes it an asset?

The reserves held by the Bank of England, for a start. Over $5bn of the foreign currency reserves belong to Scotland.

Athgray, Its the same as the missing dollar puzzle – its a sleight of hand and sounds plausible. In the case of the missing dollar the $2 should be subtracted not added – in this case yS deliberately and deceitfully swap assets and liabilities around – currency is a liability technically (look where it sits on a CB balance sheet). But yS are using an age old ploy and so far its worked pretty well. Point out the basic fallacy though and you become a bully!!! 😉

Ben, reserves are not currency.

surely it is an intangible asset ?It has some value* in terms of recognition and trust within the market place. Given the importance of banking here it probably punches above its weight as a medium for international trade. to claim this has no value as it could be anything is an argument i would need explaining in some detail [ probably very slowly and simply]

I am not getting the technical angle tbh.

* if not just give it up then as it is worthless, Can you see them doing this? Of course not as it does have value – which is indeed what the bit thm said – it tells you it is not an asset then tells you it has value

It is important to be clear what the UK pound as a currency is and why it is not an asset. A currency is a system of exchange, a unit of purchasing power that works when others recognise it as having value.

Its little wonder we dont understand economics tbh [ insert own punchline]

The reserves held by the Bank of England, for a start. Over $5bn of the foreign currency reserves belong to Scotland.

Source?

SOURCE

EDIT: lame joke linking back to bens post so save yourself some time

I have no idea if true or false tbh

Sounds a lot like you’re saying the people of Scotland, who helped pay for these assets, shouldn’t have a share in them.

A currency isn’t an asset though. A reputation can be (for good or ill). That’s what is being argued about – not the pound itself but the reputation and the history that goes with it.

The people of Scotland are of course welcome to keep their memories of what we used to do together, both the good and the bad.

Source?

http://www.bankofengland.co.uk/statistics/Documents/reserves/2013/nov/tempoutput.pdf?utm_content=buffer63331&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Then divide by the percentage of the UK population who live in Scotland.

but rUK gets to keep the asset that has no value because ……..

why do rUK care what happens to it then if it has no value?

Seriously why care if it has no value?

Seriously why care if it has no value?

So the rUK can choose to run its economic policies how it sees fit without reference to Scotland. And vice-versa of course.

Then divide by the percentage of the UK population who live in Scotland.

So we could use the same formula to work out Scotland’s share of the debt too?

So the rUK can choose to run its economic policies how it sees fit without reference to Scotland. And vice-versa of course.

which does not require rUK to keep the valueless pound so again why do they care?