Bank of England denies Scottish currency talks

The Bank of England has flatly denied claims from the Scottish government that the two have held talks on a currency union should Scotland vote for independence next month, reports The Telegraph.

In a highly-unusual announcement, a spokesman said the Bank “has not entered discussions” with Holyrood on an independent Scotland remaining in the sterling monetary framework.

The Bank published the statement after Scotland’s Finance Secretary John Swinney claimed that “technical discussions” had taken place between the two.

Alex Salmond, Scotland’s First Minister, has repeatedly insisted that an independent Scotland will be allowed to remain in a currency union with the UK, a claim rejected by all three Westminster parties.

The subject has caused considerable tension in the weeks leading up to the referendum on September 18, with Mr Salmond coming under pressure to outline his plans should ambitions for a currency union fail.

On Wednesday, Bank of England Governor Mark Carney revealed that the Bank had “contingency plans” for a “Yes” vote.

Mr Swinney called the comments “a sharp contrast to the scaremongering and threats of UK politicians”. However, he then claimed: “The Scottish Government has had technical discussions with the Bank of England regarding our proposal for a currency union and we welcome their continued acknowledgement that the bank will introduce whatever the politicians decide.”

In a statement on Thursday afternoon, a Bank of England spokesman denied this, saying:
“The Bank notes the comments made by the Finance Secretary of the Scottish government regarding technical discussions between officials of the Scottish government and the Bank of England.

“To be clear… the Bank of England has not entered into discussions with representatives of the Scottish government about proposals for future monetary arrangements in Scotland.

“As the Governor said yesterday, the design of any changes to UK monetary and financial arrangements would ultimately be a matter for negotiation between the Westminster and Scottish Parliaments. The Bank of England will deliver whatever remit it is given.”
The Bank says that in previous conversations between the Scottish Government and Mr Carney’s predecessor, Lord King of Lothbury, the Bank “did no more than answer technical questions from representatives of the Scottish government”.

A Scottish Government spokesman said: “We have always made clear that these are technical discussions and not negotiations, and that we respect the neutrality and independence of the Bank, which had made clear it will implement whatever is agreed.”
Although an independent Scotland could adopt the pound without the UK’s permission, failing to achieve a currency union would mean Scottish banks such as RBS losing the Bank of England as a lender of last resort, a development that many believe would force them south of the border.

UBS, one of Europe’s biggest banks, has predicted an immediate run on banks in the event of a “Yes” vote.