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Russian Imperialism No Threat Compared To Scottish Nationalism

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The Russian invasion and annexation of the Crimea and its aftershocks (like, you know, blowing a 777 out of the sky followed by increasing Western sanctions) aren’t good for business. But banks that do business in and with Russia—namely, all of them, but particularly Raiffeisen Bank and Unicredit and the like—aren’t sweating it. “I do not see any reason to question our business in Russia,” Raiffeisen CEO Karl Sevelda offered. “We still consider Russia to be an attractive banking market.” Attractive and growing, at least in terms of square mileage.

Scotland splitting from the U.K., however, is a totally different—and much, much more serious matter, at least according to HSBC Chairman Douglas Flint.

At the extreme, uncertainty over the Scotland’s currency arrangements could prompt capital flight from the country, leaving its financial system in a parlous state. This could, in turn, place enormous pressure on Scotland’s future fiscal policies….

Choosing an informal link to sterling, so called "sterlingisation", would help avoid these transaction costs. However, this would place enormous pressure on Scotland’s future fiscal policies – with no monetary policy levers these would be the only meaningful adjustment mechanism to address financial and economic shocks….

In all of these scenarios, Scotland’s borrowing costs and those of its businesses and consumers would rise – at least in the near term.

European Banks Expect Only ‘Limited’ Impact From Sanctions on Russia [DealBook]
Scotland has to realize the pound has been a core part of its success [Telegraph]


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