EDINBURGH Jan 29 Bank of England Governor Mark
Carney spoke to business leaders and to media after making a
speech in Scotland. Below are highlights of his comments.
ON A CURRENCY UNION WITH SCOTLAND
- Asked if a currency union was too difficult, he said: "I
didn't mean to suggest that, I merely meant to underscore what
the core issues were and then I would suggest that it is the
responsibiliy of the parties to outline how they would address
those issues. Either refute those issues as issues or outline
how they would address those issues and then others can judge
whether those proposed arrangements would be successful."
ON BOE AS LENDER OF LAST RESORT FOR INDEPENDENT SCOTLAND
- "That is one of the issues that would need to be
determined ... The short answer is I can't answer the question,
It's not for us to say."
SCOTLAND'S CAPACITY TO HOST LARGE GLOBAL FINANCIAL
- "There is a financial system here that is substantially
larger than Scottish GDP ... and the banking system
- "It brings back the importance ... that we - whether in
Scotland, the United Kingdom, Europe, the U.S., Canada - have to
end too-big-to fail, and we have to finish these various reforms
that are being worked through the FSB and G20 this year."
- "However, even with doing that, there are residual calls
on the national balance sheet through the central bank. An
indirect link becomes very much a direct link, because banks
tend to hold the debt of their home country, at least in a
substantial portion, and that needs to be taken into
- "Others will judge about the sustainability of that, and
I'm not going to provide you a conclusion on that issue."
- "In terms of sterling, in general we avoid commenting on
the level of the currency or providing commentary on the
- "We would expect some pass-through of sterling strength to
help reinforce other forces that were helping to create a more
benign inflation environment - more benign not totally benign -
and they include global disinflationary pressures."
- "Price movements in the euro zone, in the U.S. are quite
weak and commodity prices as a whole... have been weaker than
the recent past."
- "So it's within a context of providing some dampening to
the inflation outlook."
- "That leads us to expect that the pace of consumption -
growth, the pace of household spending as a whole including
housing investment - will gradually slow over the course of the
coming quarters which makes it that much more important that we
see investment pick-up and ultimately exports picking up."
- "It's incredibly important what happens in the U.S.. There
are some real similarities in the stance of monetary policy - in
the strategy of monetary - between the UK and the U.S.."
- "We are not continuing with asset purchases, so that's
different as a tactic, but the general question is how much
slack is in our economies, and to what extent can highly
accommodative policy encourage sustainable demand to pick up
some of that slack."
- "We provided for the first phase of forward guidance, we
used the 7.0 percent unemployment threshold to give businesses
in Scotland and across the UK a confidence that we weren't going
to premature withdraw monetary stimulus."
- "The MPC has signalled that we don't see any need for an
immediate adjustment to that policy, and we will provide further
thinking on guidance in the coming weeks."
- "But I will say, one last point .., that while the market
has had a different view on when the unemployment threshold was
going to be achieved, and the market view has been closer to the
base case forecasts of the bank, the market has clearly taken in
that 7 pct is a threshold and not a trigger."
- "And in fact market expectations of when we would raise
interest rates are still in 2015, and the first quarter of 2015,
which is consistent with that."