Scottish independence: Mark Carney - a man without enemies?

David Hume Image copyright Getty Images
Image caption Scottish philosopher David Hume got a mention in mark Carney's speech

David Hume, the eighteenth century Scottish philosopher, was a sanguine chap. He once noted that he had no enemies - "except all the Whigs, all the Tories and all the Christians."

It was decidedly pleasing to see the great Hume cited by Mark Carney, the governor of the Bank of England, when he addressed a business audience in Edinburgh today anent the issue of independence and a putative currency zone.

Hume, he said, had argued in one essay that the imbalances between nations sharing a currency would tend to correct themselves because money flowing to the surplus countries would raise their prices and reduce their competitiveness.

Somewhat drily, Mr Carney went on to note that the great philosopher had not had the empirical advantage of studying the Eurozone.

Had he done so, he would have witnessed the opposite of his theory. In place of self-correction, there had been crisis.

This was but one of several references to the Eurozone in Governor Carney's remarks.

The message? One cannot rely on self-correction - nor even apparent similarity in economic performance. A currency zone needed rules and regulations in order to work.

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Image caption Mark Carney spoke in Edinburgh's George Hotel

Those included labour mobility, free trade - and an effective banking union with a common scheme to guarantee deposits and common endeavours to shore up confidence.

It was no coincidence, he said, that effective currency unions (such as his native Canada) tended to have centralised fiscal authorities whose spending represented a sizeable share of GDP.

Further, he said, the existing banking union that is the United Kingdom had proved "durable and efficient".

It involved a single prudential supervisor, a single deposit guarantee scheme and a central bank able to act as lender of last resort. The measures required to institute a successful currency union would involve a ceding of sovereignty.

At which point, one can almost hear the sound of Union supporters leaping to their feet.

According to Labour, the governor's remarks mean the SNP plan is "falling apart". The Tories see it "in tatters".

In more constrained voice, the Treasury said it proved their view that a currency union would be "highly unlikely", prompting a renewed demand for a Plan B from Alex Salmond.

Why, they ask, should Scotland risk independence - especially if it would involve reinstating banking and financial institutions which are already in place?

Why bother? And why, they ask further, would voters in England agree to underpin Scottish banks post independence?

Up jump the Nationalists with a range of points.

The governor met Mr Salmond this morning and promised to continue the technical discussions which have taken place between the Bank of England and Scottish government officials.

Mr Carney, they point out, noted that there can be considerable advantages in a currency union in promoting trade and well-being, provided the rules are in place and implemented.

Further, the nationalists argue that they anticipated the points raised by the governor.

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Image caption Mark Carney met Alex Salmond at the first minister's official residence, ahead of making his speech

They were addressed in the Fiscal Commission report, commissioned by the Scottish government.

Hence, the plan for a fiscal stability pact whereby London and Edinburgh would agree to place limits on spending and debt.

And why bother? Because, argue nationalists, independence would give Scotland control of tax policy, employment policy, social security, oil and gas revenues and immigration among other matters.

Because, further, a common currency with a stability pact would be in the interests of both Scotland and England, post independence.

To emphasise, Mark Carney was neither ostensibly condemning independence nor praising it.

He said the Bank of England would work within whatever circumstances arose, within guidelines laid down by elected politicians.

That studiedly neutral stance and his technocratic approach - addressing issues arising without complaint or political grandstanding - probably allowed both sides to discern gains for their cause in the governor's address.

For the unionists, the scheme is in tatters. For the nationalists, Mark Carney's remarks are "common sense".

Truly, it seems that, unlike David Hume, the governor of the Bank of England is, for today at least, a man without enemies.

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