Carney enters Scots currency debate

Written By Unknown on Rabu, 29 Januari 2014 | 19.21

29 January 2014 Last updated at 07:19 ET By Andrew Black Political reporter, BBC Scotland

The Bank of England governor will enter the Scottish independence debate by reflecting on the currency implications of a "yes" vote in the referendum.

Mark Carney's speech in Edinburgh comes amid continuing speculation over the Scottish government's plan to keep the pound under independence.

SNP ministers would also want to retain services of the Bank of England as part of a currency union.

The UK government has said such an agreement would be "unlikely".

Downing Street believed the issue around currency was "an important part of the debate that is currently going on in Scotland".

A spokesman for Prime Minister David Cameron said that it was of no "great surprise" that on technical issues the governor of the Bank of England would want to set out his views.

Alex Salmond

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Scottish First Minister Alex Salmond said his breakfast meeting with Mr Carney had gone "extremely well"

Mr Carney's visit comes ahead of the 18 September independence referendum, in which voters will be asked the yes/no question: "Should Scotland be an independent country?"

Ahead of being a guest at an event hosted by the Scottish Council for Development and Industry, the governor met Scottish First Minister Alex Salmond.

After the breakfast meeting, Mr Salmond said Mr Carney had agreed to continue "technical" discussions on a possible sterling zone if Scotland became independent.

The first minister added: "The Bank of England is an independent institution. It doesn't take a role in party politics but we had a splendid discussion and I think crucially have agreed to continue the technical discussions, not negotiations but the technical discussions, that the Bank of England has been having with the Scottish government so that our proposals are soundly based on technical terms.

"When the governor speaks we will hear what he has to say. He will be giving a technocratic assessment of the institutional arrangements necessary to make a currency union work. He won't be advocating it or arguing against it. That is a matter for the Scottish people.

"He won't be saying whether Scotland will be better off or worse off as an independent country. That is a matter for the Scottish people to decide."

Borrowing levels

Mr Salmond said he was confident UK ministers would agree to a currency union in the event of Scotland voting for independence.

He added: "They will agree for two reasons. It is overwhelmingly in the interests not just of Scotland but of the rest of the UK to have Scotland and England sharing the pound.

"Secondly, of course, they will be driven there by the people because that proposition is popular both in Scotland and in England at the present moment.

"So the UK government ministers will do what the people tell them to do, and that is Scotland will keep the pound and England wants us to keep the pound."

In its White Paper blueprint for independence, the Scottish government said a currency union agreement was vital in letting companies go about their business, while sterling would also benefit from Scotland's continued involvement because of assets such as North Sea oil and gas.

But UK ministers have said such a deal would result in Scotland effectively having to hand over control of interest rates and borrowing levels to a foreign country.

Mr Carney, who has agreed to provide "technical, objective, dry analysis" of the issues ahead of the referendum, told the BBC last week: "There are issues with respect to currency unions. We've seen them in Europe.

"It's one of the factors that affects, actually, the outlook for the UK economy, has affected us over the last five years, affects us going forward, the challenges of having a currency union without certain institutional structures."

The event in Edinburgh comes the day after Mr Salmond said he was told by Mr Carney's predecessor - Sir Mervyn King - that the Treasury would adopt an "entirely different" approach to Scottish issues if there was a "Yes" vote in the referendum.

'Remarkable coincidence'

Ahead of discussions with the Bank of England governor, the first minister said: "When I met his predecessor a couple of years back, Mervyn King, the first thing he said to me was 'your problem is what they say now', meaning the Treasury, 'and what they say the day after a Yes vote in the referendum are two entirely different things'."

Responding to Mr Salmond's comments, a spokesman for the official campaign to keep the Union, Better Together, said it was a "remarkable coincidence" that Sir Mervyn's reported remarks backed up the Scottish government's position.

A spokesman said: "The first minister operates on the basis that people are daft and can't see through his bluster.

"Unfortunately for him, people know when someone is at it."


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