Scotland Analysis

Download or read book Scotland analysis written by Great Britain: H.M. Treasury and published by Stationery Office. This book was released on 2013-05-20 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt: The second Scotland analysis paper, Currency and monetary policy, explained that the currency and macroeconomic framework that operates across the UK would not be able to continue between two separate states. In the event of a vote for independence, there would be further consequences for the financial sector and for its customers which are analysed in the current paper. The most profound implication is that independence would create two separate financial jurisdictions: the continuing UK and a new, independent Scotland, which would require its own legal and regulatory framework. The competitiveness of Scotland's financial sector is aided by its location within the UK. Industry and international bodies view the UK as a strong tax and regulatory regime, building customers' and partner organisations' trust in UK financial firms. Being part of the UK helps support the Scottish financial services sector, which generates employment not just in financial services firms, but in the professional and other services that support the sector. Location in a larger economy also helps to reduce firms' cost of borrowing because markets perceive these firms as less of a risk. If Scotland became independent, this position would be called into question: The Scottish banking sector would be exceptionally large compared to the size of an independent Scotland's economy, making it more vulnerable to financial shocks than it is as part of the larger UK. There could be questions about an independent Scotland's ability to stabilise its banking system in the event of a future financial crisis