Monetary Union Between An Independent Scotland And The Remainder Of The UK

Finally the card playing season has drawn to a close and the past week has involved far too much food followed by hours of sedentary pleasure or pain; that depends on the hand dealt.

Quite a few people know I support Scottish independence and expect me to have the answer to the questions politicians seem reluctant to answer.

One of the questions I was asked was if I knew how having a monetary union with London would work.  I replied I had no idea although I agree with the questioner that it seemed strange to want to be independent from London yet have the Bank of England in charge of our monetary policy.  Nicola Sturgeon, in today's Herald, says:

"An independent Scotland will keep the pound because it is in everyone's best interests, and to try and suggest otherwise simply flies in the face of the facts.

"For a start, the pound is every bit as much Scotland's currency as it is that of England, Wales and Northern Ireland, and as such, it is simple common sense that we should continue to use it as an independent country.

"But that common sense argument is backed up by overwhelming economic arguments.

"We have already had the detailed expert report of the Fiscal Commission Working Group which has backed a currency union in the event of a Yes vote in next year's referendum."

That statement doesn't contain any information about the content of the 'detailed expert report' and appears to be another 'have faith in us because we know best' comment.

Of course another question followed which was: "Why are the SNP bothering with attempts to keep sterling when they insist on being full members of the EU?"  The questioner followed that up by firmly declaring that any country wishing to join the EU has to adopt the Euro.  I didn't argue with him because he's been involved in international law, at a high level, for many years.

So if anyone can explain to me why having a monetary union with England is common sense I'd be grateful.  According to Wikipedia, Brunei and Singapore are the last two nations whose dollars have remained at par and mutually interchangeable since the days when the Spanish Dollar was the united currency of large areas of the New World. It is managed by the Monetary Authority of Singapore.

Should Scotland gain independence will London create a Monetary Authority of England?

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Ownership of the Bank of England

A guest post by Edward Spalton

The shares of the Bank of England are said to be held by a nominee company. In the present, justifiable outrage about the mismanagement of the financial sector, all sorts of theories are flying around – principally that the bank is really owned by the Rothschilds or whoever is the sinister pet hate figure of the theorist.

By complete coincidence, I have a copy of the Straits Times (Singapore) of Monday October 15^th 1945 which carries this Reuters' report. I think it is pretty clear and that the ownership situation has not altered since. Gordon Brown, of course, gave the bank conditional “independence” to set interest rates, thus absolving himself and future Chancellors from the need to answer for interest policy at the despatch box in the Commons. But I don't think anything else has changed with regard to ownership. He also destroyed the bank's effective regulatory role which prevented any British or colonial clearing bank from failing in 180 years and replaced it with his complicated “tripartite” system with results which we all know.

Here is the report in full.

“GOVT. TO BUY BANK OF ENGLAND STOCK

LONDON, Oct 13 – The British Government will buy up the Bank of England capital in its nationalisation scheme, writes Sydney Campbell, Reuter's City Editor.

The bill to take public control of the bank, published today, states that the existing stock will be transferred to a nominee of the British Treasury and the King will appoint a governor, deputy governor and directors.

The Treasury will direct the bank but the bank will be managed by its directors and will issue directives to other British banks. The present proprietors of the Bank of England will be bought out in exchange for 3 per cent long dated Government stock which will give the holder the same income he is receiving from the Bank of England's stock, namely 12 per cent.

The British Government will pay £450 long term Government stock for each £100 Bank of England stock. The amount of the capital stock of the Bank of England now is £14,583,000. This first act of socialisation by Britain's Labour Government fulfilled the best expectations in the City of London – Reuter.”


Recent information from a correspondent who made enquiries of the Treasury establishes that the present nominee is the Treasury Solicitor.

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Mr Bean's Advice

On the left in the photograph is Mervyn King, governor of the Bank of England and to his right is Charles Bean, his cheery deputy.

Mr Bean is suggesting that 'older households', such as mine, could afford to suffer in this economic climate because we have benefited from previous property price rises. He assumes everyone moves house to make money rather than for location/ domestic reasons.

On Channel Four News on Monday night he said that savers had done well from higher rates in the past and we should 'not expect' to live off interest. I don't live off interest. My miniscule savings interest has fallen from more than 2.8% to 0.23% last month.  The interest I received this last year didn't pay for a haircut.

Charles Bean assumes that all 'older households' will benefit from the higher house prices yet he really has no knowledge of house prices in Scotland.  Prices have risen marginally in Edinburgh and Glasgow yet in rural areas have kept reasonably stable yet that doesn't mean if I sold my home I would have money to spend. Moving house is expensive and should I downsize to a 'pensioner home' I doubt if I would have any pocket money to add to the economy.  I would make do with the personal effects I presently own so the only people who would profit from my relocation are estate agents and lawyers.  Doesn't that say where Mr Bean's allegiance lies?

As for his attempt to persuade me to spent more - I intend to keep the wee bit I have to eat and pay to keep myself warm this winter and for a few winters to come.

Of course Mr Bean's salary would heat a mansion or two.  He took a pay rise of 2.5% taking his salary to about £280,000.  Enough said.

source

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A FIRST FOR HER MAJESTY

Mervyn King's appearance at the Treasury Select Committee yesterday has been widely reported in today's press.  His main message was that spending must be kept under control.

What hasn't been so widely reported is that after the hearing at the House of Commons, Mr King visited Buckingham Palace, at the Queen's invitation, for a private audience.  It was the first such audience with a Bank of England Governor in her 57 year reign.

The Queen must be very concerned about the state of the UK to send for Mr King.  Ted Foam has his view of the future and he may not be too far off the mark.

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