'Capital flight risk' after a Yes

Lancaster And Morecambe Citizen: HSBC's Douglas Flint warned that a Yes vote in next month's referendum could leave Scotland's financial system in a "parlous state" HSBC's Douglas Flint warned that a Yes vote in next month's referendum could leave Scotland's financial system in a "parlous state"

Uncertainty over currency in an independent Scotland could lead to "capital flight" from the country, according to the chairman of HSBC.

Douglas Flint warned that a Yes vote in next month's referendum could leave Scotland's financial system in a "parlous state".

Mr Flint, who describes himself as an exiled Scot, said the sterling currency union was an "anchor of financial stability" for Scotland.

Writing in a personal capacity in the Daily Telegraph, he said: "The alternatives to a currency union include a completely independent currency, passive acceptance of a monetary policy designed in London for the rest of the UK, or, assuming Scotland rejoins the European Union, eventual membership of the euro.

"In all these circumstances, the transition from the existing currency union would be complex and fraught with danger.

"At the extreme, uncertainty over the Scotland's currency arrangements could prompt capital flight from the country, leaving its financial system in a parlous state.

"This could, in turn, place enormous pressure on Scotland's future fiscal policies. Scotland would give up the benefits of being part of a larger fiscal union with the stability that offers in terms of scale, diversification and fiscal transfers."

Mr Flint said Scotland would face "an enormous challenge" to introduce its own currency, while an informal use of the pound, or "sterlingisation", would put " enormous pressure" on fiscal policy.

He said: "Monetary policy itself would be imported from the rest of the UK; Scotland would be faced with monetary policy implementation without representation - a very odd form of independence."

The three main parties at Westminster have all ruled out the Scottish Government's preferred option of a formal currency union between an independent Scotland and the rest of the UK.

Mr Flint said: "That decision is wholly consistent with the actions that have been taken in the aftermath of the financial crisis to minimise the risks to UK taxpayers from financial sector shocks arising in overseas and wholesale banking operations.

"It is also consistent with the knowledge gained from recent events in the eurozone, which have highlighted the challenges inherent in managing a currency union without political and fiscal union."

Speaking for the pro-Union Better Together campaign, Ian Murray, MP for Edinburgh South and shadow business minister said: "This is another hugely experienced expert who has underlined the currency chaos which has plagued Alex Salmond's campaign.

"When a voice such as Douglas Flint's warns of the risks of money leaving a separate Scotland to somewhere safer, you pay attention.

"With just days to go until up to a million Scots start voting by post, Alex Salmond is running out of time to name Plan B.

"Using the pound without any formal currency union would mean cuts to our public services, higher costs for Scottish families of things like credit card bills, car loans and mortgage costs. It would risk the livelihoods of millions of people in Scotland."

Comments (2)

Please log in to enable comment sorting

9:44am Fri 22 Aug 14

Newhavenles says...

Never mind the money,just crown me king Alexander 1st of Scotland
Never mind the money,just crown me king Alexander 1st of Scotland Newhavenles
  • Score: -2

12:39pm Fri 22 Aug 14

JamesBond0070 says...

Some of the 'Scots' worried about the 'outside' money flying away/ All they have to do is to set up a printing machine and print as much of their own as they want! After all, since they do not wish to be a part of any other country, they should not need to worry about money other then their own!!!
Some of the 'Scots' worried about the 'outside' money flying away/ All they have to do is to set up a printing machine and print as much of their own as they want! After all, since they do not wish to be a part of any other country, they should not need to worry about money other then their own!!! JamesBond0070
  • Score: 0
Post a comment

Remember you are personally responsible for what you post on this site and must abide by our site terms. Do not post anything that is false, abusive or malicious. If you wish to complain, please use the ‘report this post’ link.

click2find

About cookies

We want you to enjoy your visit to our website. That's why we use cookies to enhance your experience. By staying on our website you agree to our use of cookies. Find out more about the cookies we use.

I agree