Boost for Yes campaign as experts say rUK and Scotland pound-share sensible

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  By Martin Kelly
 
The Yes campaign has received a boost after international money experts came out in favour of an independent Scotland and the rest of the UK sharing the pound.
 
Yesterday currency experts at Deutsche Bank AG and Citigroup Inc made supportive comments that the best currency option for an independent Scotland is to retain the pound as part of a currency area with the rest of the UK.

Oliver Harvey, a strategist at Deutsche Bank, said: “Scotland fits an optimum currency area with the rest of the UK very well… It wouldn’t make any sense for Scotland not to have the pound.”

Valentin Marinov, the head of European Group-of-10 currency strategy at Citigroup added: “Given the close economic ties between the two and assuming that these ties need not weaken going forward, the potential introduction of a currency union need not affect significantly trade and other flows.”

The interventions were welcomed by the SNP with MSP Kenneth Gibson describing them as “extremely welcome and significant”.

Mr Gibson added: “The views of currency experts at Deutsche Bank AG and Citigroup Inc validate the common-sense position that a sterling area between an independent Scotland and the rest of the UK suits the interests of both countries.”

There was further good news for the Yes campaign after analysis by the National Institute of Economic and Social Research (NIESR) concluded that: “…in all cases, the UK’s debt to GDP ratio will rise, with possible consequences for its credit rating.  At the same time, Scotland’s debt burden will be lower than the UK’s in all cases.”

Mr Gibson added: “And the analysis by the National Institute of Economic and Social Research which concludes that -‘Scotland’s debt burden will be lower than the UK’s in all cases’- demonstrates that Scotland is financially stronger than the UK as a whole, and that therefore we’ve got what it takes to be an independent country.

“As the debate continues, the more people are recognising the value of a Yes vote and the gains of independence.”

The head of anti-independence campaign Better Together has also signalled his own support for a currency union should Scotland vote Yes next year.

On 10th January speaking on BBC Newsnight Scotland, Alistair Darling said: “Of course – of course it would be desirable to have a currency union … If you have independence or separation, of course the currency union is logical”.

The interventions by international money experts follow comments from Bank of England head Mark Carney who last week said he “welcomed” the opportunity to discuss a currency union with the Scottish Government.

At a press conference held last week, Mr Carney was asked his view on Scottish independence and whether the Bank of England would act as a lender of last resort.

He replied: “…there are a number of important complex issues related to these broader questions. And these are ultimately, you know the bigger issue is ultimately a decision for the Scottish people; they will need to make those decisions as fully informed as possible.

“I don’t think that an FSR press conference is the right venue to provide, you know, a couple of sentences on such an important issue.  I think there will be an appropriate time and an appropriate venue to provide a more detailed perspective – objective, technocratic, boring perspective on some of these quite serious issues, so whether they relate to the functioning of currency unions, lender of last resort and the structure of the financial system within currency unions or without. And so we’ll do that in due course.”

Pressed on whether there had been discussions on a monetary union, the Bank of England Chief said: “I have not had any discussions with members of the Scottish government.  And my predecessor did have some very basic technical discussions with Mr Salmond within the course of the last couple of years.  I certainly welcome the opportunity to have those discussions.

He added: “They’re busy.  They’ve been writing this 667 page report, so No, they’re busy, I’m busy.  There has been an effort to set up a meeting and I’m sure it will happen at some point.”

The Bank of England was brought into public ownership in 1946.  The Scottish Government has argued that as an asset of the United Kingdon, both the institution and the currency are as much the property of Scotland as the rest of the UK.