Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Carney: Scotland has to cede sovereignty if it wants pound

6 Comments
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.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Picton: the UK property hotspots for rental income

Picton: the UK property hotspots for rental income

Picton Property Income CEO Michael Morris reveals how he is planning to ride the ‘ripple effect’ as UK economic growth spills out from the capital across the country.

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

This week Brewin Dolphin's head of research talks to Mike Riddell, fund manager at Allianz Global Investors, about the forces driving bonds markets in a tumultuous week for markets.

Play Henderson's Hermon: how to be defensive in smaller caps

Henderson's Hermon: how to be defensive in smaller caps

Hermon, who manages the Henderson Smaller Companies trust, talks about he will tackle a 'challenging' 2016.

Your Business: Cover Star Club

Profile: 'what we are doing at Mosaic is Darwinian'

Profile: 'what we are doing at Mosaic is Darwinian'

The changes in financial services over the last few years may leave some destitute warns Marco Sambucci of Mosaic Money Management

Wealth Manager on Twitter