to wonder why the SNP aren't getting the same bashing that UKIP are?

[kinkytoes]

I'm not a political expert by any means and I know there has been a lot of discussion on both topics here.

But both these parties have the same ultimate aim - independence for their countries. Why is no-one calling SNP supporters racist? Not that I think they should be - just curious about the apparent double standard.

It's really quite complicated, isn't it?

All Scottish banknotes are supported by gold stored by BoE, that's still ours, of course we'll have money. What a strange thing to say.

How do you define "supported"? Only a small fraction of UK banknotes, Scottish or otherwise are backed by physical gold reserves.

I think Peach might be right.

^The sorts of assets that may be subject to negotiation in the event of a vote for Scottish independence are the cash, currency or gold reserves held by the UK state. These assets are very different from the system of currency itself; the particular currency used by a state is not an asset on the state’s balance sheet which can be divided up like the money in
a bank account. An individual pound is an asset, as is a collection of pounds in a bank account. The pound as a system of currency is not.^ here

So iScotland would be entitled to a share of the BoE assets, but these aren't the assets which back up Scottish banknotes. Those assets belong to Clydesdale, RBS and BoS.

So Peach is right and if iScotland chooses not to take on any debt, it also forfeits a right to a share of the cash assets, leaving the Scottish government with no cash reserves.

This makes sense actually- because it's the cash reserves which helps to determine credibility and overall credit score.

Anyone who knows this stuff for real, please feel free to correct me!

Presumably if the current arrangement of Scottish banks issuing money were to end, the Scottish banks would withdraw their notes from circulation and receive back their deposits at the BOE.

In that scenario then, one of the 3 would then have to be chosen (or agree to be?) the central bank of an iScotland?

Or a new central bank would need to be set up? What are the SNP's proposals for a central bank?

They haven't released any proposals other than for a currency union Taz.

7. Will an independent Scotland continue to use the Bank of England?

Yes. The Bank of England is the central bank for Scotland, as well as for England, Wales and Northern Ireland. It was formally nationalised in 1946 and is therefore an institution and asset owned both by Scotland and the rest of the UK.

(but this is wrong. BoE is an institution, not an asset, so there is no legal precedent for them to be apportioned equally, see here, also here and here)

As far as sharing the currency goes, you can't share anything with someone who doesn't agree to share with you. Sharing is a mutual agreement.

If Salmond gets his way then politicians from E,W and NI will all work together to protect the interests of their constituents, many (most) of whom will want Scotland to get nothing at the expense of the rest of the UK and will only countenance what is in the interests of the remainder of the UK.

I also suspect, a "Yes" vote will bring a fair amount of hostility and a "stuff you" attitude from everyone else. It will be like a messy divorce and it will be ugly.

(but this is wrong. BoE is an institution, not an asset, so there is no legal precedent for them to be apportioned equally)

I've got to agree with you, and it will be a foreign institution post independence to boot. It's not particularly independent to keep your monetary system tied to/controlled by a foreign country.

Too much confusion. Too many unanswered questions.

Should add that I'm a No voter because I'm quite happy with the way things are, so I don't tend to follow what the SNP says from day to day. Instead I have in my mind a little picture of how I* would do independence if I were in charge That little picture definitely has Scotland with its own central bank.

Good grief, that bolding went wrong!

Given that the Yessers claim Westminster rides roughshod over Scotland, it is odd that they also say Westminster will be so obliging post-independence.

Yeah, 5 months to go and we're still just guessing

It is all very complicated and I am not sure I am following all the fine points but it seems to me:

The Yes camp would like to have their cake AND eat it, financially.

The fact that we are all still just guessing, with 5 months to go, leads me to suspect that many many businesses and investors will not want to go down this risky and unclear path and may pull out of Scotland, which cant be a good thing.

Do we meet EU entry requirements without a central bank?

I cant help seeing the whole debate in quite a long timespan and global terms. Can anyone tell me where the claims of separate Scottish nationality and identity come from? Isn't it more political than anything else? I mean, for how long in the course of human history was there a separate Scottish kingdom and state?

Surely all Britains are from the same original pre-Roman Celtic and pictish populations that peopled the British Isles from Cornwall to Scotland? And the difference in accent is due to the invasions in Scotland in the fifth and sixth centuries mainly being by Scandinavians and Jutes, not Saxons? Hence why many of those supposed Gaelic placenames are Scandinavian in origin.

I cant help seeing the independence campaign as a reassertion of ancient British rights, particularly a rejection of Norman rules (feudalism, tendency towards communal ownership of property), culture and language. The support for the culture and habits of Norway is a little odd, as they were originally invaders too.

The indyref isn't about looking backwards to history and "who arrived when?"

It's about our future, and how we'd like to be governed in that future.

Moody's says that iScotland would be likely to have an 'A' rating.

'Potential risks to this assessment arise if Scotland refuses to assume a "fair and proportionate share" of its debt obligations, which would increase the UK's net debt burden and would be considered credit negative. In addition, a potential currency union with the remainder of the UK would be credit negative if it were to materialise'.

It also says that overall, given the small size of Scotland's economy relative to that of the remainder of the UK and Scotland's likely investment-grade credit profile, any credit impact (negative or positive) from Scottish independence on UK sovereign creditworthiness is likely to be limited

Moody's announcement

Financial Times link

Same rating as the Czech Republic, Estonia, Poland and Slovakia here.

Norway, Sweden and Finland are AAA. The UK is AA1.

OK, so we will potentially have a lower credit rating than the rest of the UK whilst being tied to rUK's monetary policy. How's that going to work out for us? I'm not terribly interested in sweeping statements like "we'll be able to set our own policies", I'm interested in the practicalities of being stuck with a central bank who will be setting interest rates to the benefit of rUK while our borrowing rates are potentially higher than rUK's.

It's like a worst case scenario of quasi-independence!

How's that going to work out for us? I'm not terribly interested in sweeping statements like "we'll be able to set our own policies", I'm interested in the practicalities of being stuck with a central bank who will be setting interest rates to the benefit of rUK while our borrowing rates are potentially higher than rUK's.

I've been thinking about this all day, although I don't have the economic knowledge to understand the ins and outs.

It would be more expensive for Scotland to borrow money than rUK. So in Scotland there should be higher interest rates to compensate. This would affect our economy through a decrease in spending and consumption.

But we would have to use BoE interest rates, which would be lower because it would be cheaper for rUK to borrow.

So it's costing Scotland more to borrow and we couldn't plug the gap with interest rates? Meaning that Scotland has to borrow more and more. More money chasing the same amount of goods = inflation?

The only way a CU would work is if Scotland cedes financial and economic control to Westminster. We would vote for a government and they would have to report back to WM... it's not independence.

So it's costing Scotland more to borrow and we couldn't plug the gap with interest rates? Meaning that Scotland has to borrow more and more. More money chasing the same amount of goods = inflation?

No, because as you said the BoE are in charge and they wouldn't let that happen. I think in that scenario huge spending cuts would be put in place in Scotland by Westminster.

No, because as you said the BoE are in charge and they wouldn't let that happen. I think in that scenario huge spending cuts would be put in place in Scotland by Westminster.

And then post independence the blame for the huge spending cuts could still be firmly placed on Westminster, the very government the SNP is so keen to get away from.

I know Yes voters will likely argue that this is wild speculation but I don't see how the current proposal will work in anything but a negative still-economically-tied-to-rUK way for iScotland.

Santana, it seems to me you are confusing consumption with borrowing. More consumption does indeed mean inflation - that is basic supply and demand. If buyers demand more then suppliers charge more = inflation (bear with me whilst I spell it out - it is more for my benefit than yours because it is a long time since I looked at an economics text book!)

However if a country borrows more they have less money to spend because they have the debt repayments to meet or they keep on spending to support the costs they already have and keep on borrowing to pay for it, a bit like the Labour government did for while 5+ yrs ago. In the end the whole structure collapses because you can't keep spending borrowed money. The only thing to do would be to raise taxes if Scotland could do that with relatively few net tax payers, or you drastically cut spending to try and get it under control and cut the borrowings. Either way I think you would get a period of deflation and recession. At least that is what happens the way I work it through.

There could be other scenarios of course - that is the thing about economics. It isn't black and white and what you do about a situation depends on your political leanings. Plus Scotland won't be in an economic bubble - all countries are co-dependent although why Scotland would want to make it even hard to control their economic position by being under the control of the Bof E I don't know. It wouldn't be in their best interests at all and if there are people voting yes on the basis that Scotland negotiate to keep Sterling I think they might be in for a shock. They are not going to be able to control the peaks and troughs of economic cycles if the interest rate is not within its control.

That's the big problem, isn't it, BigBoobiedBertha? The SNP are full of promises about being able to make our own decisions and look, we'll even be able to keep the pound! However, they aren't making clear what the greater impact of tying to the BoE will be and an awful lot of people don't see past "We get to keep the pound!"