With the currency debate about Scottish independence heating up, and the Bank of England’s governor on the wires again saying that a currency union with Scotland would undermine its sovereignty, we are picking up from the news wires that a Survation poll commissioned by the Scottish newspaper, Daily Record is reporting a 53% NO vote when adjusted for the undecided voters.
We remind our readers that the question asked on the referendum set for Thursday, the 18th of September is, “Should Scotland be an independent country?”. Just after recent polls published over the weekend have shown support for independence, those results are now called into question by the latest study published by Survation.
Mark Carney Stated the Obvious Once Again
The Bank of England’s Governor, Mark Carney, stated in a testimony to the Treasury Select Committee on the future financial stability of an independent Scotland, “An independent Scottish central bank might need sterling reserves of roughly 25% of Gross Domestic Product (GDP) to be a credible lender of last resort.”
He proceeded to say, that considering the circumstances, that number could be much higher – up to 100% of GDP. Mr. Carney rightfully turned the attention of the committee to the financial sector exposure of an independent Scotland – Scottish financial assets total about 10 times its GDP.
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The British pound reacted swiftly to this latest poll result, shooting higher by half a cent against the US dollar. The currency markets have priced in substantial chances of the Scottish independence vote making the pound go haywire. As of writing, the British pound is higher by 0.5% against the US dollar and by 0.75% against the euro.
On Monday the British currency opened sharply lower after a YouGov poll showed that the YES vote has gathered 51% support.
A Currency Union Which Simply Cannot Work
Earlier, Prime Minister David Cameron stated in Edinburgh, “A currency union with Scotland cannot work.” We can’t blame him – according to the statement by Mr. Carney there are some serious obstacles before such a union.
The Bank of England’s governor referred to the ill experience of the Euro Zone which has fragmented the economies of the members of the Euro Area. He stated that a currency union without a fiscal union is detrimental to the strength of the euro and said, “The Euro Zone currency arrangement is one reason why the Euro Zone’s economies are so weak.”