Scottish Independence: BoE's Carney Decries the Purpose of Scotland Keeping the Pound

Bank of England Governor Mark Carney warned voters that even if an independent Scotland keeps the pound after the referendum, without the support of a political union, it could create severe disruption to the country's economy.

Speaking at a conference of trade union leaders, Carney said that a "currency union needs fiscal flows and a lender of last resort" – all of which Scotland would give up if it breaks the 307-year old union with England.

He also warned that the Eurozone "shows that happens if you don't have all the components needed for a currency union" and that "in that context, [an independent Scotland keeping the pound] would be incompatible with sovereignty."

"All of Britain's three main political parties are opposed to a currency union with an independent Scotland," he also noted.

The Scots will be asked the straight "yes/no" question: "Should Scotland be an independent country?" on 18 September this year.

Squabbling Over the Pound

An independent Scotland keeping the pound has become a key point of contention in debates about breaking the union.

In the last televised clash between former Chancellor Alastair Darling and Scottish National Party's Alex Salmond, the first minister reiterated that Scotland would keep Sterling whether the rest of the UK likes it or not - suggesting blackmail over the country's assets and liabilities if independence were to deprive Scotland of its currency.

Scotland's Finance Secretary John Swinney then confirmed the devolved government's stance live on TV.

"Alex Salmond said in the debate that our preferred option was a currency union in which we would take our fair share of the debt that has been built up over time," said Swinney, referring to SNP Salmond's debate with Darling on 25 August.

"But if the UK is going to seize the assets then it is welcome to all the liabilities and we won't be having any of them if that is how the UK behaves," he said.

Scotland has a £150bn (€189bn, $250bn) economy but owns £100bn worth of UK debt.

Elsewhere, former Lib Dem leader Charles Kennedy echoed Carney's remarks over an independent Scotland keeping the pound.

"You can call it what you like so let's call it a pound. But it is a pound that is not backed by a central bank. So if there is a run on the pound, unlike today, you are stuffed," said Kennedy.

Kennedy said if Salmond negotiates on the basis that Scotland would not shoulder its bit of the debt, on day one of independence "the international markets would have you for breakfast lunch and dinner".