False analogy

Published on 22/12/2012 00:00

I don’t think Alex Orr (Letters, 19 December) understands the differences between central banking and retail and investment banking.

It is a false analogy to equate a lender of last resort, charged with control over narrow and broad money supply as well as clearing and government account keeping, with an investment house or mortgage broker.

Ireland had a currency link to sterling once; the Isle of Man and Gibraltar still do. It is called a currency board.

There is far less monetary and fiscal independence in such an arrangement than there is as 10 per cent of the voting population of a country with a strong central bank with international credibility.

The closest Scotland could have to representation in sterling outside the UK would be for sterling to adopt a federal reserve approach in which the Bank of England would be the largest of equals. I see little appetite for shifting our entire central banking model to suit yet another whim o’ the wisp from Salmond.

Any moves to have Scotland keep sterling and agree to tight fiscal rules would give it something like the euro.

The idea that the English, myself included, would entertain basing our currency on the promises of Alex Salmond is deliciously absurd.

(Dr) Jon Stanley

Edinburgh