Can someone explain something to me regarding the Bank of England and whole Lender of Last Resort thing (and I apologise in advance if I sound extremely dim but my brain has turned to mush reading the propaganda from both sides and being bombarded with shite on FB).
I can explain the legal side of it.
I understand that the Bank of England was nationalised in the 1940's and therefore (although it's name may suggest otherwise) is owned by England, Scotland, N.I and Wales. So it can be considered a Scottish asset.....
Probably more precise to say that it is owned by the UK state. If I were to be really technical I would say that it is owned by the Queen of the UK in her capacity as monarch. It isn't owned by the people of the UK as such, nor the constituent parts of the UK.
But if we opt for independence are we giving up this "asset" and therefore it bail us out in the event it all goes tits up ?
If iScotland were to become independent, a new state would be created. Think of a state like some kind of super-person. On independence you would have two of these people: NewState (iScotland), and OldState (rUK), which would continue in existence. As a default position, NewState would owe no debts to anyone else (the logic being that that NewState didn't take out the debts. Similarly, NewState wouldn't be party to any treaties. With assets, it's a bit more complicated. Assets owned by OldState that are part of NewState's land become NewState's. That would include buildings attached to the land. The consensus seems to be that it would include mineral resources under NewState's EEZ (that is, sea beyond a certain distance from land). Non-land assets would continue to be owned by OldState. That means any property such as shares, money lent, gold reserves, possibly leases, various goods and effects and so on.
Where does it leave the BoE? Well, the buildings are in rUK's land, so the rUK gets them. The rUK gets the BoE debt book as it's a non-land asset. I don't know how the UK state owns the BoE, but if it is by way of shares in a limited company, the rUK would get the shares too. The rUK would get the BoE's holdings in sterling.
I imagine that sterling put into circulation by the BoE constitute a debt owed by it to the holder of those notes ("I promise to pay the bearer etc). That's a liability, not an asset. And as noted above, NewState starts out with no assets.
As for the ability to issue sterling itself, this is not an asset, legally speaking. To put it another way, the money in your bank account constitutes a debt owed to you by the bank. The debt can be quantified in any currency you like. For example, when the Euro was issued, bank accounts were (I understand) redenominated in Euros. The value of the debt didn't, in theory, change.
Finally, the ability to issue currency with the status of legal tender is purely a matter for an individual state's own laws. French law, for example, will provide that the euro is legal tender there. Accordingly, as a separate state from the rUK, iScotland would not be able to oblige rUK to use the same currency as it. This is why a currency union has to be a matter of agreement.
None of the above affects private property rights. Also, there is nothing to prevent NewState and OldState entering into a treaty to vary these rights to their mutual convenience.
Again I apologise if this has been discussed/explained.
No worries. I enjoy explaining it. Hope I wasn't too longwinded.