:00:00. > :00:00.headlines from BBC World News. Now for the latest financial news with
:00:00. > :00:14.Sally Bundock and World Business Report.
:00:15. > :00:23.Money talks, but the Scottish currency issue remains unanswered.
:00:24. > :00:26.We look at the options. Plus ` markets look to the US Federal
:00:27. > :00:35.Reserve for fresh hints on when the cost of borrowing will rise in
:00:36. > :00:40.America. Welcome to World Business Report. I'm Sally Bundock. Also in
:00:41. > :00:44.the programme: China's President begins a tour of India. We look at
:00:45. > :00:50.the importance of economic ties between the Asian giants. But first:
:00:51. > :00:56.In less than 24 hours' time, the Scottish people will go to the
:00:57. > :00:59.polls. But as both sides of the campaign trail head out for one last
:01:00. > :01:02.day, so several key questions remain unanswered. And one of the most
:01:03. > :01:05.prominent ` what currency would an independent Scotland use? That is a
:01:06. > :01:18.question our business editor Kamal Ahmed explores for us now. There are
:01:19. > :01:22.four options if Scotland votes yes. A formal currency union, carrying on
:01:23. > :01:29.using the pound without a union with the rest of the UK, joining the
:01:30. > :01:32.euro, or creating a new Scottish currency. The first, a formal
:01:33. > :01:35.currency union, is when two or more nations use the same money. The euro
:01:36. > :01:38.is an example of this. It means Scotland and the rest of the UK
:01:39. > :01:48.would share a Central Bank, the Bank of England. The pros include minimal
:01:49. > :01:57.disruption to business and the Bank of England as a lender of last
:01:58. > :02:01.resort, protecting savers from financial failure. The cons include
:02:02. > :02:05.an interest rate set outside of Scotland. Taxpayers outside Scotland
:02:06. > :02:09.would be on the hook if a Scottish bank went bust. The second is that
:02:10. > :02:14.Scotland would carry on using the pound without a union. An
:02:15. > :02:20.arrangement called sterlingisation. Other countries do this, Panama uses
:02:21. > :02:25.US dollars without their agreement. Montenegro uses euros but is not in
:02:26. > :02:29.the EU. On the upside, Scotland would still use an internationally
:02:30. > :02:32.recognised currency, but on the downside, Scotland would not control
:02:33. > :02:35.interest rates, and the Bank of England would no longer be the
:02:36. > :02:38.lender of last resort. The Scottish government would have to take on
:02:39. > :02:43.that role alone, which could leave it needing to raise large amounts of
:02:44. > :02:47.new money. The third option: Scotland aims to join the EU, and
:02:48. > :02:54.new members have two pledged to adopt the euro. The pros, being part
:02:55. > :02:58.of the world's largest trading bloc with the backing of the central
:02:59. > :03:02.bank. But it would take years to join in the eurozone already has its
:03:03. > :03:07.fair share of economic problems. Finally, a fourth. Scotland could
:03:08. > :03:11.meet its own currency which could be pegged to Stirling or float freely,
:03:12. > :03:16.that would mean a new Scottish central bank would be set up. The
:03:17. > :03:21.pros, Scotland would control interest rates and monetary policy.
:03:22. > :03:23.But the new currency is initially likely to be weak and would need
:03:24. > :03:28.millions of pounds in foreign reserves to ensure stability. And
:03:29. > :03:32.Scotland might have to bail out its own banks should anything go wrong.
:03:33. > :03:36.A new Scottish currency could float on international markets like the
:03:37. > :03:40.Swedish currency, but then the currency would be exposed to
:03:41. > :03:43.currency swings which might not be good for businesses or consumers.
:03:44. > :03:46.Kamal Ahmed making sense of the options. I'm joined by Rupert
:03:47. > :03:56.Lee`Browne, chairman and chief executive of Caxton FX. First of
:03:57. > :03:59.all, don't you think it's a bit much to ask those in Scotland to make a
:04:00. > :04:04.decision as big as this without knowing what currency they are going
:04:05. > :04:07.to be using? Certainly there is. And I think that the difficult choice
:04:08. > :04:14.for Scotland at the moment is deciding on such a pivotal issue.
:04:15. > :04:17.Because everything around the future economy of Scotland, and also to a
:04:18. > :04:22.certain extent the rest of the United Kingdom, hangs on this one
:04:23. > :04:29.question. What currency are they actually going to be using? We heard
:04:30. > :04:35.the four options very clearly, the pros and the cons, what is the best
:04:36. > :04:38.one? Out of all of them, we believe a formalised currency union is the
:04:39. > :04:44.most practical and realistic option. In Westminster they may
:04:45. > :04:49.gnash their teeth, but ultimately it is good for Scotland, and certainly
:04:50. > :04:52.good for the UK, for us, to have that formalised currency union,
:04:53. > :04:58.where Scotland actually agrees to shoulder their fair share of the
:04:59. > :05:05.debt burden that exists, and going forward, is prepared to actually
:05:06. > :05:09.accept things like interest rates set by the Bank of England. And how
:05:10. > :05:15.long will this process take? Let's say the result is yes on Friday
:05:16. > :05:19.morning. And negotiations will begin between Westminster and Scotland.
:05:20. > :05:24.How long will it take? It is a long period of uncertainty, isn't it, for
:05:25. > :05:27.markets? It is an enormous period, in terms of markets it has long
:05:28. > :05:34.time. A way that Scotland has laid out the 18 month timetable, we are
:05:35. > :05:39.not entirely sure that that is realistic. And if you are look at
:05:40. > :05:43.any of the euro entry which has been happening over the last 20 years, it
:05:44. > :05:48.has been taking about two to five years for a currency to be
:05:49. > :05:52.introduced, realistically. In terms of Friday morning reaction, talk us
:05:53. > :05:55.through both scenarios. If the result is yes and then no, what will
:05:56. > :05:59.happen on the foreign`exchange markets? In the event that there is
:06:00. > :06:03.a yes, then certainly we would expect to see a lot of volatility
:06:04. > :06:09.for the ensuing 18 months, if that is the timetable. If there is a no
:06:10. > :06:12.vote then we would expect the Stirling to recover. It has lost
:06:13. > :06:15.around percent in the last month or so due to the uncertainty. But it
:06:16. > :06:19.would certainly recover, and then we are back into the whole question
:06:20. > :06:24.about what will happen to interest rates `` sterling. Very briefly,
:06:25. > :06:28.there has been scaremongering about Friday's reaction if the result is
:06:29. > :06:34.yes, the sterling sinking 10%. A lot of it is priced in? There is
:06:35. > :06:37.certainly pricing there. To drop a set in a month is considerable, but
:06:38. > :06:43.we would expect to see a sharp reaction. A very sharp reaction
:06:44. > :06:51.indeed. Thank you very much put your analysis. `` for your analysis. And
:06:52. > :06:54.you can find everything you wanted to know about the referendum and
:06:55. > :07:00.surrounding issues on the BBC website's 'Scotland Decides' page.
:07:01. > :07:02.Is the American economy now strong enough to survive without emergency
:07:03. > :07:05.help from its central bank? Therefore is the era of cheap money
:07:06. > :07:09.provided by the Federal Reserve about to come to an end? These two
:07:10. > :07:12.questions have been posed before, but later today we could have the
:07:13. > :07:15.answers. The US Federal Reserve ends its two`day meeting later, with a
:07:16. > :07:26.statement and press conference that will be watched very closely, as Ben
:07:27. > :07:30.Thompson reports from Washington. America's economic recovery has been
:07:31. > :07:33.fuelled by two things. Cheap money and low interest rates. Together,
:07:34. > :07:40.they have boosted growth and cut unemployment. They have also come at
:07:41. > :07:45.a heavy cost. At its height, the emergency stimulus was costing
:07:46. > :07:51.America 85 yen dollars a month. And it is a price that America no longer
:07:52. > :07:54.wants to pay. Policymakers here at America's Central Bank have already
:07:55. > :07:59.scaled back that financial buffer. It is due to end entirely next
:08:00. > :08:03.month. And so attention now has shifted to the cost of rolling.
:08:04. > :08:08.Interest rates have been at their record lows since 2008, and so a
:08:09. > :08:14.rise is inevitable. The question however is when that might happen. I
:08:15. > :08:18.think the Fed is very unlikely to hike rates if they don't feel the
:08:19. > :08:21.economy can handle it. I think one of the reasons we are having this
:08:22. > :08:26.conversation is that the data has been looking better in the US of
:08:27. > :08:29.late, and as a result the Fed feels a little bit more comfortable about
:08:30. > :08:33.the idea that rate rises may be coming a little bit sooner than the
:08:34. > :08:36.market is currently pricing in. In the market reaction is important,
:08:37. > :08:40.because low rates have met more money in the pockets of ordinary
:08:41. > :08:45.Americans. That has translated into a stock market rally. Add in that
:08:46. > :08:50.economic stimulus programme and the economy has been awash with cash. So
:08:51. > :08:56.many fear that turning off the taps too soon could derail the recovery.
:08:57. > :08:59.We have never been here before. There is a risk raced on what we
:09:00. > :09:05.have experienced before, you could see a pullback in business
:09:06. > :09:07.investment, you could see a pullback in consumer expenditures related to
:09:08. > :09:12.access to credit. We think the evidence would suggest the economy
:09:13. > :09:18.has recovered to the point that that is not... That doesn't have to
:09:19. > :09:23.happen. So when good rate rise? Until now the Fed has insisted it
:09:24. > :09:26.won't happen until considerable time after it stimulus programme ends.
:09:27. > :09:31.Many on Wall Street consider that to be the first half of next year. They
:09:32. > :09:36.will be watching closely for any change in language which could
:09:37. > :09:44.signal a rise much sooner. Market don't like surprises, but it could
:09:45. > :09:46.be just what they get. India is preparing to welcome the Chinese
:09:47. > :09:50.President Xi Jinping later today. The symbolic three`day trip is seen
:09:51. > :09:57.a chance for India to push for improved economic ties with China.
:09:58. > :10:04.Our very own Rico Hizon is in Singapore for us. Tell us more about
:10:05. > :10:07.this trip. It is the first visit of a Chinese president to India since
:10:08. > :10:13.26 and there is a drive on both sides to forge closer trade and
:10:14. > :10:17.investment relations. China is India's guest trading partner but it
:10:18. > :10:24.is not and equal relationship. For any dollar exporter, it imports
:10:25. > :10:29.three. So they have direct by this. Over the last year, is between the
:10:30. > :10:33.two sides dropped to an in Munich 65 billion US dollars. So in the medium
:10:34. > :10:39.term, for Narendra Modi, boosting trade and foreign investment is
:10:40. > :10:46.critical. To create jobs for the 13 million young Indians entering the
:10:47. > :10:52.market each year. As for Xi Jinping, it is about opening warmer
:10:53. > :10:55.ties with India, and a new chapter of influence compared with arch
:10:56. > :11:02.rival Japan. And investment pledges are expected of about 35 early in US
:11:03. > :11:15.dollars to India. That is all we have time for. I will see you soon
:11:16. > :11:21.as we look through the papers. Welcome back. The market for the
:11:22. > :11:24.cigarette is estimated to be worth more than ?90 million a year. But
:11:25. > :11:27.experts are still deeply divided over their safety. Last month the
:11:28. > :11:30.World Health Organization called for a ban on their indoor use, because
:11:31. > :11:35.of concerns about public health. Our correspondent Tim Muffett reports.
:11:36. > :11:37.The arguments this world. Electronic