• A central bank is not necessarily a credible lender of last resort if it does not issue a currency
  • Independent Scotland would need access to sterling reserves to be lender of last resort
  • Scotland may need sterling reserves of roughly 25% of GDP, notes Hong Kong has 110-120% reserves of GDP
  • Reserves required depend on sophistication of financial system
  • Scottish government would need to make budget decisions consistent with currency arrangement if adopted unilaterally
  • Scottish financial assets of around 10 times GDP
  • Scottish central bank would need reserves of between 25%-100%+
  • BOE financial stability role would continue in any transition period
  • Scottish banknotes would still be backed by BOE (still wouldn’t be fully accepted in most English pubs though
    ;-)
    )

He’s being put on the line about what Scotland could or would need to do to set up on their own. He’s playing a pretty tight game of not being drawn into saying something out of line.