It has been an unfortunate week for Alex Salmond, who was reprimanded by both the Scottish Labour Party and the Treasury in the space of 24 hours.
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It has been an unfortunate week for Alex Salmond, who was reprimanded by both the Scottish Labour Party and the Treasury in the space of 24 hours.
After an especially savage grilling by leader of the Scottish Labour party Johann Lamont, Salmond claimed that it would be “entirely reasonable” for a separate Scotland to have the same influence that the UK Treasury does over the Bank of England’s monetary policy committee (MPC).
Watch the exchange at yesterday’s First Minister’s Questions:
The Scotsman reports:
Pressed by Ms Lamont to provide “details of that agreement” that would allow an independent Scotland influence over the Bank of England, Mr Salmond insisted it would be “entirely reasonable” for a separate Scotland to have the same influence the UK Treasury has over the MPC and that there was “nothing unusual about that” arrangement.
He told the Scottish Labour leader he had spoken to Sir Mervyn King, Governor of the Bank of England, in February, but he did not say what he had discussed with him.
He told MSPs that, in the event of Scotland becoming independent, it would “expect to be part of the appointments process” if it continued to use the pound.
But a spokesman for Mr Salmond was later unable to give examples of similar arrangements of other nations that share a currency having representatives on the body that sets interest rates.
• Cameron heads north, Salmond heads south and Mervyn’s living in the future 16 Feb 2012
• A separate Scotland will be worse off if it keeps the pound 10 Feb 2012
• Swinney on Scotland currency – more questions than he answers? 2 Feb 2012
Unfortunately for Salmond, the treasury were quick to rebuke his claims in a statement released yesterday:
“In that scenario, [an independent Scotland] would have no say over its own monetary policy as set by the Bank of England.”
Left Foot Forward have already reported on how an independent Scotland would be worse off keeping the pound:
The most crucial part to understand about sterlingisation is that a separate Scotland, without a currency board, will have no control whatsoever over monetary and exchange rate policy. Salmond has been mistakenly pushing the argument that goes along the lines of:
‘The Bank of England has had independent control over monetary policy since 1998 and therefore will continue to take Scotland into account.’
Not so. The Bank of England is currently obliged to regard the effects its decisions will have on Scotland. Without Scotland being part of the UK and with no currency board, this will not apply. In other words, decisions that have an impact on Scotland will be taken in another country that is focused on stabilising the national economy, not the Scottish one.
Instead of actually attaining independence, a separate Scotland will ironically tie itself to the rest of the UK through the importation of the effects of monetary policies conducted by the Bank of England.
Why is Salmond so desperate to push for an independent Scotland, or as he calls it “a sterling zone”, which would allow the Bank of England to disregard Scotland when creating monetary policy?
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62 Responses to “Lamont teams up with Treasury to reel in Salmond”
Anonymous
The possible arrangement of an independent Scotland with the Bank of England is less cut-and-dried.
Because an independent Scotland could credibly threaten to leave sterling, it might be able to negotiate for a seat on the Bank of England’s Monetary Policy Committee. Scotland could be officially represented on the MPC, much as the Federal Reserve Bank of New York has a permanent seat on the Federal Open Market Committee of the United States’ Federal Reserve System.
It is true that none of the seats on the MPC is currently regional, but that could be changed. The Bank of England has an incentive to agree to give Scotland a seat: it retains more seigniorage and more importance.
if Scotland remains on sterling. Should the Bank of England refuse Scotland a seat, that snub would not bode well for a sterling victory over the euro in a Scottish popular referendum.
It is true that there is no obvious precedent for giving an independent Scotland a seat on the MPC. Panama, after all, has been on the US dollar standard for more than a century without a seat at the table of the US Federal Open Market Committee. But Scotland is a much larger share of the sterling area, GDP-wise, than Panama is of the dollar area. And Scotland has historically been part of the UK, whereas Panama has never been part of the US
Sterling should remain the currency of Scotland for the foreseeable future, because we’re part of a single financial area – and that’s true for both Scottish and UK governments. The iissue of the Bank of England being the lender of last resort is a bit of a red herring, since any government has ultimately to go to the markets to cover national debt.
Anonymous
“This is laughable, johann lamont gives the first minister a grilling”
I agree effen hilirious. the writer is obviously viewing through Lamont tinted glasses.
The only advice I could give is, should have went tae spec savers.
Anyone who like Lamont takes a British Nationalist stance and supports a strong imperialist British state and the retention of Trident and opposes the Scottish peoples right to self determination by spreading lies and fear has no right to title of Left wing let alone Socialist.
So who exactly is in the no camp along with the right wing labour party,
well we have the Tories who labour are now in coilition with in some councils even though the tory vote was negligible.
We have the Liberal sleep with anyone party [sounding like labour’s sleep with anyone to keep the SNP out policy]
We have UKIP [ Nutter Tories on speed and ex-BNP members]
We have the actual BNP with the one eyed Fuhrer
We have the Ulster Unionist parties [Tories with N.I accents] and various dubious organisations like the UDA.
And of course we have our very own Scottish Orange Order who Glasgow Labour council leader Gordon Matheson has been doing deals with to save both labour in Glasgow and the Union [we are not really supposed to call it Union as the no but more of the same camp has banned its usage in Scotland]
Not exactly the most progressive bunch of bedfellows you could have.
Labour party members should start to ask why are their leadership is happy to support a position that is supported by some of the most vile reactionary organisations in the UK and the only possible conclusion they could come to is because their own leadership is reactionary and supporting a reactionary position on Scottish self determination with a view to a future peerage
More a case of the same old smelly right foot dressed up in worn out faded reddish socks