Labour MP Willie Bain has claimed that plans put forward by the SNP for an independent Scotland to use the existing UK regulatory framework for Scottish banks were “undemocratic”.
Mr Bain, the MP for Glasgow North East, attacked the proposals claiming that they were “fundamentally anti-democratic” and said that there would be no political accountability for an independent Scotland.
Speaking on BBC Radio Scotland the Labour MP said that using the existing framework provided by the Bank of England would lead to “financial instability”.
Mr Bain said that Scotland was part of the system at the moment because we are part of the UK, but independence would mean the Bank of England would then become a “foreign central bank” setting interest rates and that Scotland would not be able to print more money as is happening now.
Asked if Labour was advocating complete separation of all institutions in the event of independence Mr Bain refused to be drawn. The Labour MP claimed that the growing fiscal integration within the Eurozone was evidence that such integration would not work in the UK.
Mr Bain accused the SNP of wanting to “put barriers up” between Scotland and the rest of the UK, he also claimed the proposal of sharing bank regulation was at odds with earlier attacks by the SNP on a lack of regulation from London that led to the banking crisis.
However, speaking earlier, Scottish Finance Minister John Swinney explained that strong currency arrangements being in place was important for the business community in an independent Scotland.
Mr Swinney insisted that a mature relationship with the Bank of England, which had now been given the necessary powers to enable it to properly supervise the banking sector, was in Scotland’s interests.
The Finance secretary explained that with Scotland operating in a formal Sterling Zone then it was a sensible move to adopt the safeguards afforded by the bank, which he pointed out was as much Scottish as any other part of the UK.
Responding to suggestions by BBC Scotland’s Douglas Fraser that this would look “less and less” like independence Mr Swinney replied:
“The crucial point about independence is about ensuring that Scotland has the ability to exercise the fiscal discipline that would enable us to grow our economy out of the economic challenges that we have faced and to put Scotland on a competitive advantage.”
Mr Swinney described this as “strong fiscal flexibility” but insisted that there would be things that Scotland had contributed to and would continue to share, because it was in our interests to share.
“The first point is to remember that the Bank of England is as much an institution of Scotland as it is of any other part of the United Kingdom.
“So, it is essentially providing the type of financial activity that an independent Scotland would require, it happens to be providing that within the United Kingdom.”
The interviews with both John Swinney and Willie Bain can be heard here: