U.K. Chancellor of the Exchequer George Osborne suggested a vote for Scottish independence next year would imperil the use of the British pound as the new state’s money because political union is needed to operate a single currency.
The U.K. government on Tuesday, April 23, will publish a study on the implications for the currency of Scottish independence. Osborne made the comments today in a joint article with Danny Alexander, chief secretary to the Treasury.
“A formal currency union can only work with political and economic union,” Osborne and Alexander said in the article published on the Treasury’s website. “The pound we share now works and it works well. Under independence all the alternatives are second best. So our question to the nationalist -- are you really saying second best is good enough for Scotland.”
Voters in Scotland will decide in a referendum set for Sept. 18, 2014, whether to leave the 306-year-old U.K. The semi- autonomous government in Edinburgh has proposed that the new state would continue using the pound and become a shareholder in the Bank of England, which would oversee Scottish lenders.
Scotland’s plan to keep the Bank of England as the lender of last resort and to influence its policy making should nationalists win their bid for independence is “implausible” and “fanciful,” a panel of lawmakers said on April 10.
In a report published today, the Economic Affairs Committee of Britain’s upper House of Lords said the requirements of joining the European Union would mean Scotland would need its own financial regulator. This would create a situation where Scotland’s banks had two regulators in different countries.
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