Carney will discuss GBP currency union
By Kira Iukhtenko, FX BAZOOKA analyst
The BoE Governor Marc Carney will meet the Scottish First Minister Alex Salmond in Edinburgh today in order to discuss the challenges presented by a potential sterling currency union. Mr. Carney will hold a speech hold a speech today at 12:15 GMT at the Scottish Council for Development.
The issue of Scotland's independance remains on the table - there are less than 9 months left before the September 18 referendum. The voters will be asked the yes/no question: "Should Scotland be an independent country?". There will be another important question to be answered if there is a "Yes" vote: will Scotland be alowed to keep using the pound?
UK Government oficially questions whether such an arrangement will be possible. According to the Chancellor of the Exchequer George Osbourne, it is “unlikely” the rest of the UK would welcome such a currency union. The Edinburgh meeting comes a day after Mr. Salmond said Carney's predecessor as a BoE Governor Sir Mervin King told that the Treasury would adopt an "entirely different" approach to Scottish issues if there was a "Yes" vote in the referendum.
Earlier this week Mr. Carney warned of the dangers of currency unions, referring to the euro zone's example. “It’s one of the factors that affects the outlook for the UK economy, has affected us over the last five years, affects us going forward – the challenges of having a currency union without certain institutional structures.”
What to expect today:
- Mr. Carney intends to give a “cold analysis” of the challenges presented by a currency union
- He will address issues such as the financial structures and foundations that are required for a shared currency between foreign governments and also look at the benefits
- According to the BoE spokesman, Mr. Carney doesn't plan to publicly endorse or oppose Scottish independence itself