* BoE's Carney to give first speech in Scotland at 1315 GMT
* Scotland to hold independence referendum on Sept. 18
* Pro-independence campaigners want to keep pound
By David Milliken
EDINBURGH, Jan 29 Bank of England Governor Mark
Carney steps into the heated build-up to Scotland's independence
referendum when he speaks in Edinburgh on Wednesday about
whether the country could break from Britain but keep the pound.
Carney has said he will stick to "dry analysis" of the
issues, including a proposal by supporters of independence to
carry on using sterling even after seceding from Britain.
But he will struggle to avoid being drawn on whether this
risks replicating the problems of euro zone monetary union -
something he briefly alluded to in an interview last week.
Politicians on both sides of the debate will be quick to
jump on any comments that back their case when Carney gives a
speech in Edinburgh at 1315 GMT, followed by a news conference.
"There are a number of hornets' nests that he won't want to
open up," said Philip Shaw, UK economist at Investec.
By contrast, there is relatively little more that Carney can
say about British monetary policy and changes to his forward
guidance strategy before it is discussed by all the BoE's
policymakers at their Feb. 5-6 rate-setting meeting.
Carney's trip to Scotland is his first since becoming BoE
governor in July. He is due to meet Scotland's First Minister
Alex Salmond, a champion of Scottish independence.
Salmond's Scottish National Party, which runs Scotland's
devolved government, and defenders of the three centuries-old
union with England are locked in an increasingly bitter debate
over the rewards and risks of independence.
On Tuesday Salmond said that Carney's predecessor, Mervyn
King, had advised him privately that Britain's finance ministry
would soften its negotiating stance if he won an independence
vote. The BoE declined to comment on Salmond's remarks.
KEEPING THE POUND
The SNP wants to form a currency union with the rest of the
United Kingdom if it wins the Sept. 18 referendum.
The SNP has proposed that as part of that plan, the Bank of
England should act as a lender of last resort for Scottish banks
and that an independent Scotland should have a voice within the
As Britain's top bank regulator as well as its monetary
policy chief, Carney needs to clarify if this means that
Scotland's big financial sector would still need to be regulated
from London, and whether the BoE would function well as a
cross-border institution, Shaw said.
Keeping the pound would help Scottish companies, including
large banks, to avoid the costs and volatility of working with a
But the SNP's critics have sought to draw parallels between
the SNP's currency union plan and the way that countries in the
euro zone share a central bank in a currency bloc that has been
plagued by governance problems since its inception.
British finance minister George Osborne has said the rest of
Britain might be unwilling to let an independent Scotland keep
the pound. The SNP has responded by suggesting that Scotland
might refuse to take on its share of Britain's 1.2 trillion
pounds ($2.0 trillion) in government debt in return.
Last month the British Treasury said it would honour all
existing government debt regardless of whether Scots vote for
independence, a move aimed at preventing volatility in borrowing
costs before the referendum.
With the independence campaign lagging in opinion polls,
financial markets have so far shown little concern about the
chance of Scotland leaving Britain, and taking a chunk of North
Sea oil and gas with it.
But the most recent poll published on Sunday shows the
pro-independence campaign starting to gain ground, with 37
percent in favour of independence, 44 percent against and 19
percent unsure, according to a survey by polling company ICM.