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Carney: Scotland has to cede sovereignty if it wants pound

by Max Skjönsberg on Jan 29, 2014 at 13:27

Carney: Scotland has to cede sovereignty if it wants pound

Scotland would have to relinquish a degree of sovereignty if it would keep sterling as its currency in the event of becoming independent, according to governor of the Bank of England Mark Carney.

Scotland has signalled it would keep the pound if voting for independence in September. However, Carney (pictured) said in a speech in Edinburgh that the experience of the eurozone shows that a ‘durable, successful currency union requires some ceding of national sovereignty.’

Carney said a prerequisite would be a banking union between Scotland and the rest of the UK, referring to common supervisory standards, access to central bank liquidity and lender of last resort facilities, common resolution mechanisms, and a credible deposit guarantee scheme.

‘Without a banking union, cross-border capital flows can be restricted, the effectiveness of monetary policy impaired and, in the extreme, the viability of the union itself undermined,’ said Carney, speaking at a lunch hosted by the Scottish Council for Development and Industry.

According to Carney, a banking union would also need common fiscal arrangements, as ‘problems in one country are very likely to spill over to others.’

Referring to the European experience of the inadequacy of fiscal rules as opposed to fiscal mechanisms, Carney said the Scottish parliament and Westminster ‘would have to agree on whether fiscal rules were sufficient or whether…risk-sharing mechanisms were necessary’.

On the broader question of whether monetary union would be the right option if Scotland were to become independent, Carney said it was entirely up to the parliaments of Scotland and Westminster to negotiate and that the Bank of England would implement any outcome of such talks.

6 comments so far. Why not have your say?

getting more concerned every day

Jan 29, 2014 at 14:37

Is this the way forward, or simply some more of Mr. Carneys game changing guidance?

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Peter Barrett

Jan 29, 2014 at 16:06

What part of independence does Salmon not understand.

Scotland will have to either reintroduce the groat or join the doomed euro if it want true independence; most English people don't want Scotland with their drain on the Exchequer through the Barnett formula etc. etc.

Bring it on.

Peter Barrett

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Jan 29, 2014 at 16:17

If Mr Carney asks nicely will they take their Royal Bank as well.........

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Skoolboy error

Jan 29, 2014 at 16:22

"most English people don't want Scotland", really? Have you asked all of them?

As a Scot who wants Scotland to remain part of the UK, comments like that are unhelpful.

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aidan vaughan

Jan 29, 2014 at 16:29

We are an island nation which has enjoyed many centuries of inter marriage- very few families are solely constituents of one part- it would be very sad to see the break up of the UK after such a good political and economic union. Seems amazing to the outsider that Salmon has kept his bandwagon running for such a long time -certainly doesn't seem to represent the views of the proud Scottish folk I deal with. What influence would wee Salmon have in Brussels- as much as the Baltic states?

We will see what Scotland decides... why not just keep patriotism for the Calcutta Cup?

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Jan 29, 2014 at 17:29

It's Salmond, Alex Salmond, or was that a funny Scottish fish joke?

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