The Bank of England was ready to flood the financial markets with millions of pounds of emergency funding if Scotland had voted to break away from the UK in last month’s referendum.
Outlining the contingency plan that would have been rolled out in the event of a yes vote, the Bank of England was also ready to stand behind bank notes issued by Scottish banks in an attempt to reassure customers that there would be no immediate changes.
“Under current arrangements, Scottish banknotes are backed fully by their issuers’ holdings of Bank of England notes, UK coin and deposits at the Bank of England. This would have been a key public message in the event of a yes vote,” the Bank of England said.
The details released by the Bank’s financial policy committee – set up by the coalition in the wake of the 2008 crash – show the extent of the planning that had been put in place ahead of the referendum. In the event, Scotland voted by 55.3% to vote to stay in the United Kingdom.
But in the immediate days before the poll on 18 September there had been sufficient concern for Bank of England governor Mark Carney to fly back to London from Cairns in Australia where he should have been attending a G20 meeting, while the chancellor, George Osborne, did not attend at all.
“In the extreme, it was possible that the prospect of that risk materialising in the future could have threatened financial stability in the present. If depositors, policyholders and other creditors believed that an independent Scotland would adopt a new currency, they might have preferred not to take the risk that their assets might be redenominated into that new currency,” the Bank said.
via The Guardian
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