Posts tagged 'Scotland'

A Scot vote bonus for Long Room members

Sorry we can’t offer this up to the open web, but if you are planning to stay up to watch the Scottish independence vote, and you also have access to the usual place, check this handy little excel download. Read more

No, Betfair has not just called the Scottish Referendum

Doing the rounds on Twitter this afternoon ….

Betfair advert

The important word there is “sportsbook”.

Betfair’s exchange has become a much-watched sentiment indicator for the Scottish vote. This is where gamblers bet against each other directly and the house extracts a rake for providing the market. At pixel time, £8.8m has been matched on the punter-to-punter exchange. Read more

Markets Live Special — Donovan of UBS joins to discuss the Scottish vote

Tuesday at 11am.

Click here.

Paul Donovan, global economist at UBS, will join Bryce and Murphy for our regular Markets Live session. Extracts from his latest note on the Scottish independence vote below… Read more

Structured Scottish independence

There is a paper to be written on how UK structured finance nomenclature borrows from the topography of a Britain which is sort of (but not quite) familiar, and which feels reassuringly permanent. We suppose it’s like the Shipping Forecast.

Aire Valley, Arkle, Arran, Brass (that one’s from Yorkshire), Darrowby, Granite (famously), Lanark, Leofric… Read more

Well they would redomicile, wouldn’t they?

Cross-posted from Lex Live — Lex’s new, free, blog. Lex has also been writing notes this week on the consequences of independence for sovereign debt, banks, and Scotland’s oil industry


Or, why it isn’t surprising at all that RBS and Lloyds would move their respective holding companies to the UK, probably overnight, if Scotland voted to become independent. Despite the odd packaging of this as NEWS by the UK press.

It’s the emergency liquidity (or ELA). Click chart to enlarge:

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And the market says No

Momentum can be a funny thing, but for the bettors at Betfair, it has moved firmly into the “No” camp.

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Scottish currency union, the unilateral Montenegro option

Here’s an interesting point from Capital Economics’ Roger Bootle on Tuesday regarding a potential Scottish currency union. They could go down the unilateral adoption route.

To recap, independent Scotland wants to keep the pound via some sort of currency union, ideally based on the BoE continuing to accept Scottish assets as collateral in exchange for sterling liquidity.

The UK, however, is not willing to accept this because it would mean unrestricted UK support for Scottish banks, which may or may not now be regulated to the same standards. Read more

Cataclysmic hyperbole?

Back in the days of the Great Northern Rock bank run, a long conversation was had in the newsrooms of most media organisations.

Should we hold back from reporting on what are still smallish queues given the potential to exacerbate panic for no reason? Or do we consider this a legitimate story, that we didn’t cause, and cover the hell out of it? Read more

Equities, ex-UK

After reading John McDermott (formerly of these pixels) on the latest independence vote poll numbers and why he reserves the right to panic…

Take a moment to reflect on this late (potential) addition to the No-vote campaign, via Citi’s Jonathan Stubbs:

The history of the union has been kind to UK equity investors. Since the Acts of Union were passed by the Parliament of England (1706) and Parliament of Scotland (1707), UK equities have returned c12,700,000,000% (Figure 1) with a slightly less impressive annualised return of 6.3%. Our back-test concludes that equity investors have been well served by the Union, to date.

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A Québécois Scotland?

Canadian inspiration is all the rage. The Guardian reports that poutine has reached British shores, while UBS looks to the country’s history of separatist politics for guidance following a YouGov poll which suggested a surge for the yeas ahead of Scotland’s independence vote on September 18.

In 1995 Quebec voted against independence by a slim margin: 50.58 per cent no to 49.42 yes. A similar result, cautions the bank, could “awaken investors generally dormant sense of risk of Scottish independence”. Read more

Constitutional change in Spain

Something to keep in the back of your mind as once remote political events become everyday, is that the Catalan question still lingers.

Here’s Citi’s recent assessment of the local but in no-way endorsed by Madrid poll set for the Autumn:

Catalonian independence (due in November 2014).

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Your Scottish crossbill, cut out and keep edition

Depending on where you stand, a crossbill is either a genus, Loxia, of birds in the finch family (Fringillidae), with three to five (or possibly many more) species OR the most probable currency arrangement that will pop out of a yes vote on Scottish independence in September.

This, from Barc, is an attempt to list the ways such a new Scottish currency might be constructed. Do click to enlarge: Read more

On the complexities of introducing ScotlandCoin

Alternative currencies are being issued left, right and centre these days. So what’s stopping Scotland issuing its own currency? (Did you not know that Spain already has SpainCoin?)

Well, what most people don’t realise is that Scottish institutions already issue their own currency because the Scottish pound is already a private currency. Nobody notices, however, because it’s so sophisticatedly pegged to the Bank of England pound thanks to Scottish banks being part of the BoE central bank system and collateralising every note they issue with a sterling asset of some sort.

For as long as the Scottish banks have the sterling collateral needed to maintain the 1:1 valuation, there is no reason for the value of the Scottish pound to disconnect from that of the UK pound. Read more

The currency question Alex Salmond cannot answer

This guest post on the issue of Scottish independence is from Paul Donovan, Global Economist at UBS in London…


As the referendum on Scottish independence approaches, the rhetoric around the currency arrangements for an independent Scotland has escalated. An unnamed British cabinet minister has been cited as suggesting that currency union could be used as a bargaining chip (specifically in exchange for Trident bases). The casual assumption that a fundamental economic structure can be bargained for political capital is deeply troubling; it is just such approach that created the Euro with the flawed architecture that it has today. Read more

Oh look, another RBS risk factor

Spotted deep in the bank’s 2013 results. “We will be a more UK focused bank…” — you can say that again. Read more

UK drunkenness, tabulated

Click for the figures…

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Guest post: Back to the future with Scottish currency

The following is a guest post from Chris Cook, a senior research fellow at the Institute for Security and Resilience Studies at University College London. His work is focused on a new generation of networked markets – which will, in Chris’s view, necessarily be dis-intermediated, open, decentralised and, therefore, resilient. But his approach is informed by the past, and it is there that he finds a framework for an independent Scotland to use the pound, a Plan A Plus.

The rejection by all the Westminster parties collectively of the SNP’s Plan A for a post-independence UK currency union has elicited a string of possible Plan B solutions, several of them already considered and rejected as inferior to Plan A by the SNP’s expert group of ‘wise men’.

But the current debate is ill-founded, since the UK can have no more control over who uses the £ symbol as a unit of account, than they can have control over the use of metres and kilogrammes. Read more

How Scotland really lost sterling union

This post is just to flesh out a point in this great piece by John McDermott — so read that first.

But we think it’s an important point. An alternative title for this post: What’s under your gilt?

After all, it is the debt that has enabled Her Majesty’s government to turn so breezily confident that currency union with an independent Scotland “is not going to happen”, fully seven months before an independence referendum. Read more

Secret liquidity and Scottish independence

Yes, it’s hardly a neutral document on the matter.

Still, there are lots of interesting charts in the UK government’s latest report on the finance and economics of Scotland becoming a sovereign state, this time covering the dangers from banks…

…Although we think they missed one.*

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What price, kilt-edged risk?

Alternatively, what price to taxpayers for political pride.

Spotted in HM Treasury’s collection of responses to the idea of letting Scotland issue its own bonds later this decade — a… wide range of guesses about how they might be priced: Read more

Scotland’s unsolicited non-rating

We couldn’t help but notice that the major ratings agencies were terribly coy about Scotland.

From the FTRead more

Doubt cast on any future Scottish sovereign rating

An independent Scotland would not be able to count on receiving triple A status, the FT says, citing private interviews with the three leading credit rating agencies. Standard & Poor’s, Moody’s and Fitch – indicated an independent Scotland would not automatically inherit the UK’s top-notch rating. Scotland could expect to receive an investment grade rating, but some notches below triple A. Their refusal to endorse the Scottish National party comes as a blow, because its politicians have asserted that it was “inaccurate” to suggest an independent Scotland would not be rated triple A and sought to play down fears that going it alone would raise the cost of servicing Scotland’s share of UK national debt.

The West Shetland question

Exhibit A: the North Face of Ben Nevis, Scotland’s highest mountain.

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Introducing… Kilt-edged securities

At long last, Scotland is to meet the capital markets.

Scotland is one of a rare breed of nations: it has its own legal system but lacks sovereignty. It’s also a fiscal outlier. Unlike sub-sovereign entities in the US, Italy and Australia (to name a few), it has little flexibility over taxation and is unable to issue bonds. Read more