In 1995, the Queen was willing to speak in favor of Canadian unity during a Quebec referendum on independence: Queen falls victim to radio hoaxer | The Independent | The Independent
A Staff Report that touches on it: How does the Queen answer the phone? - The Straight Dope
I don’t see why expressing an opinion on one of the major political issues of the day wouldn’t be considered to be “politics”.
She’s believed to be literate and fluent in the English language, so why wouldn’t she?
Or maybe she thinks it would be counterproductive, either in terms of votes or for her position in an independent Scotland.
Because this is the beginning of the process, not the end.
The Commonwealth is a social club that’s pretty irrelevant to whether countries are “intertwined.” There’s no reason to think Scotland wouldn’t be in the Commonwealth, but if it wasn’t, it wouldn’t actually impact anything consequential. Ireland isn’t in the Commonwealth and I don’t know that anybody is worse off because of it.
There are any number of currency structures that would be viable for an independent Scotland. Krugman observes that the Yes-folk appear to be attached to a currency union with rUK. Absent pronounced fiscal integration, which seems unlikely, this sounds like a time bomb in much the same way the Euro was.
One claim of Krugman that I don’t have a handle on is the assertion that Scotland’s interdependence with England makes having its own currency difficult. I would think that some sort of crawling peg might work. Similarly taking on large amounts of sterling debt while setting up your own currency will require a lot of fiscal restraint and financial engineering. I see the best currency choices as being mediocre over the medium run, and mediocre choices being more likely and more prone to disaster. If you consider the 2008-present downturn a disaster, which I do.
Cameron, Clegg and Miliband are all heading north in an eleventh-hour effort to keep Scotland in the UK: http://www.cnn.com/2014/09/10/world/europe/uk-scottish-independence/index.html?hpt=hp_t2
“I promise I’ll treat you better, baby, just don’t leave me” - seems like an ineffective response, countering emotion with facts and policies.
The Panamanian balbo has maintained 1-to-1 parity with the US dollar for more than a century.
Panama is smaller than Scotland, the US is bigger than rUK, and the economic difference between Panama and the US is much larger than the difference between Scotland and England.
This is not to hold up Panama as a model economy, but to illustrate a point about money. The balboa circulates, because it already exists in physical form, just as any independent Scottish notes would already exist and already circulate. Which means if they need to break the peg and allow the currency to float, they could do it at any time. They’re not stuck like Spain is stuck. This is to say that in a monstrous financial crisis, Scotland could behave more like Iceland (unemployment now back under 6%) than like Spain (unemployment still over 20%).
I realize that opinion articles have limited space, but this is a significant difference. An independent Scotland already has the foundation to float its money.
That’s because it’s just not true, well, depending on what specifically he finds “difficult”.
Scotland’s free banking system of the late 18th century was noticeably better than the English system under the BoE. Adam Smith talks about it a bit in the Wealth of Nations. Scottish banks could issue their own notes, without interference from the government-chartered monopoly in England. Everybody used gold as the base of the system, but Scottish banks had more flexibility since they didn’t operate under the constraints of centralized control in London, which did not operate in their favor. The current system still has vestiges of this former decentralized control. When Westminster put an end to new note-issuing banks in Scotland, in 1845, they grandfathered in any already-existing banks, and that’s basically where they are now.
It’s intriguing that an independent Scotland could actually return to that old system with almost no effort. In this case, the “gold” of the system would be the pound sterling instead of the shiny metal itself. The reserves could be kept physically on hand in Scotland, instead of in England, if the BoE was feeling sore about the matter. It can be done unilaterally without any trouble.
I’m not saying this would be a good system. I don’t know. But it would be incredibly easy to set up. All the new Scottish government would have to do is… well, basically nothing. Just return to the general state of affairs before 1845. I notice on a brief internet search that I’m not the first to point this out. (Of course, I have somewhat less confidence than that author that a system last used in 1844 would work well today. I’m just saying it would be simplicity itself to set this up.)
Cameron orders the Scottish flag to fly over 10 Downing Street until the vote: Reuters | Breaking International News & Views
Moreover, if an independent Scotland continues to use sterling, or peg its currency to it, it will be ceding control over its currency system to the Bank of England.
Scotland’s monetary policy is already decided by the Bank of England. A sterling peg doesn’t change that aspect of their relationship, since it is already the case.
The issue with independence is that Scottish banks likely lose their access to the BoE as a lender of last resort. So what happens if there’s a crisis? Well, that could be bad. Extremely bad. But still, it’s not on the eurozone level of terrible.
Am I right in thinking that if RBS and the Lloyds Group subsidiaries HBOS and TSB move their HQs to London (as recent shareholder notices have stated) then they are back under BoE protection?
Yes, they would be protected, but I couldn’t tell you the exact criteria the BoE would use to make decisions with respect to their remaining branches in Scotland, or with rUK branches of Scottish banks.
Those branches become foreign banks. Ordinarily, a foreign bank would be a new institution, owned by the parent but chartered within the rules of the foreign country and using the currency of that country. That’s not exactly the case here. Those branches were chartered based on UK law. They use sterling. They keep their reserves with the BoE. And if they get into liquidity emergency, they can of course borrow from the central bank if they have the proper collateral.
The branches might suddenly be found on foreign soil, the majority of their depositors foreign citizens. What becomes of them? Hard to say. In some ways, the Bank of England potentially has harder decisions to make than an independent Scottish government which would just want things to stay roughly the same.
There have been threats, but in some ways it’s hard to believe that the BoE would be so draconian. Would they even go through with it and cut off the Scottish banks? Not necessarily. The fourth biggest emergency borrower from the US Federal Reserve during the financial crisis just so happened to be the Royal Bank of Scotland. There were complaints from some corners about foreign banks receiving bailout cash, but in the main, it was not a big deal. In a crisis, these lending decisions tend to be made for the sake of the perceived health of the financial system as a whole. Pragmatism rules over any strict adherence to political sound bytes previously uttered on the eve of a polarizing vote.
Really, the most prudent option for everybody is to just… keep doing what they’re doing with respect to money. No decisions have to be rushed into. If the BoE feels it wants a buffer, it can do so gradually according to mutually understood rules that evolve over time as the masters of money figure out the new world they’re living in. I’m an American, and I don’t have strong opinions about this independence vote, but I think the financial risks have been blown somewhat out of proportion. A risk exists, I can’t deny that, but I don’t believe it should be a deciding factor.
I suppose another reason for moving the domicile to a London address is that RBS is about 80% owned by the UK government at the moment.
Kim Jon Un supports Scottish Independence.
Hellestal -
Well I’ve discussed various currency options I consider viable for an independent Scotland and even mentioned Panama a page back. The main problem I see is that there’s no assurance that the Scots won’t make serious policy errors, as the EU did when they joined currencies without getting the fiscal integration right.
My other problem is insufficient understanding. What separates Panama from Argentina? Beats me.
I’m not so sanguine about free banking. Yeah, yeah I’ve read about the Scots and the US during the 19th century. I’ve also read about bank panics in the US during the same era. Lender of last resort is a big thing. That said, I seriously doubt whether the Scots will choose free banking during the 21st century, so this discussion is moot. In other words, I’m predicting an explicit lender of last resort will be set up. I certainly hope so.
There are many ways for an independent Scotland to get currency right and wrong. We can’t assume they will do the former: recall that the Euro project went well for years before it crumbled.
And there’s no assurance that the Bank of England will act responsibly as a caretaker for Scottish monetary concerns.
But there is genuine assurance that a more locally controlled institution will respond with more concern to that region’s issues. Concern doesn’t automatically mean quality, but it’s a decent start.
So sanguine as who?
I didn’t say the system would work. I said it was one possibility. I agree that they’re extremely unlikely to take such measures, but that’s exactly the point. We don’t approach economic or political matters scientifically. People offer fears of change, but fears compared to what? The status quo is favored only because it’s familiar, not because it’s better. Spain would’ve been better off breaking away from the euro at the beginning of the crisis. They stuck with it out of inertia, and they’ve suffered for no good reason.
There is genuine risk with Scotland, as I’ve acknowledged repeatedly. But their risk isn’t at anywhere near the Spanish level. And what do we see? Comparisons to the euro and to Spain. My point from the beginning has been that the Scottish risk is simply not as large as they’re making out. That remains true no matter how many times Krugman cries Maastricht.
The US system and the Scottish system were extremely different. There is absolutely no comparison, and they do not deserve the same label.
Yet again, this is unfairly one-sided.
It’s true that the Scottish could fuck up their money if the “yes” coalition wins this vote. But likewise, we can’t just assume that the Bank of England will do right by Scotland if the vote goes the other way. I could borrow the same (inapposite) euro example and show how Frankfurt has done wrong by its own periphery.
My point has been, is, and will continue to be the unfairness of the monetary hurdle that the Scots are supposed to meet. It’s a concern, yes, but it shouldn’t be used as the final criterion on which way they should be voting. Yet that’s how some famous commentators are treating it. Poo on that. Money should be considered in balance with everything else, not as the single great weight that crushes the scale.
I basically agree with that. I didn’t read the Krugman Oped as claiming that currency was the be-all and end-all: I interpreted him as saying: “Here’s something that Scotland really needs to get right and the signs from the Yes advocates are not encouraging.”
However… most of the third party characterizations of Krugman’s opinion took Hellestal’s interpretation. And by “Most” I mean, “Everything I have read other than the oped itself and Kevin Drum.” Who admittedly understands that the Yes-folk might be simply removing currency complexities from the debate. Also, so far Krugman hasn’t exactly walked his remarks back on his blog, so I have to admit Hellestal has the stronger interpretation. Krugman did however endorse this post by Simon Wren-Lewis, saying it, “…says more clearly what I’ve been trying to get at with regard to the economics of Scottish independence.” mainly macro: Scotland and the SNP: Fooling yourselves and deceiving others
Total Hijack!: Hellestal. We gotta have another US monetary policy discussion in GD sometime. The Fed is expected to raise rates in another year or so and I want to lay down some markers.
And the pro-Moscow Ukrainian rebels. With friends like these…
Screw that. Piers Morgan supports union. I guess we all have our crosses to bear. Or ignore.
So the queen finally has made a statement about independence, saying “Well, I hope people will think very carefully about the future”
I think many people have taken this as a support for a “No” vote, but I think more than anything that’s people projecting what they think her private beliefs are onto her public speech. If someone who was known or suspected to support independence made that statement, it would be interpreted as a call for a “yes” vote. At least to me it seemed pretty neutral, but maybe other people can enlighten me if that’s some sort of code happening during the debate.
The palace was quick to offer the assurance that the queen was not making a political statement.