Pound Issue Looms Large In Debate
Could Scotland keep the pound if it left the UK? And if there was a Yes vote in the referendum, would it even want to?
These have been key questions for both politicians and the public in the run-up to the September 18 vote.
For the main Westminster parties the answer is simple: if Scotland leaves the UK it can no longer use the UK's currency
"If Scotland walks away from the UK, it walks away from the UK pound,'' Tory Chancellor George Osborne declared on a visit to Edinburgh.
Equally, Alex Salmond and his Scottish Government argue the pound belongs as much to Scotland as it does to the rest of the UK.
He has continued to insist that if there is a Yes vote, UK ministers will quickly change their stance.
"What is said by Westminster during the heat of a political campaign will differ greatly from the reality of life after the referendum,'' the Scottish First Minister has said.
That stance appeared to be backed up when an un-named UK Government minister told the Guardian: "Of course there would be a currency union.''
The anonymous minister added: "There would be a highly complex set of negotiations after a Yes vote, with many moving pieces. The UK wants to keep Trident nuclear weapons at Faslane and the Scottish Government wants a currency union - you can see the the outlines of a deal.''
Despite that, the three men vying to be the next chancellor - Mr Osborne, Labour's Ed Balls and Liberal Democrat Danny Alexander - have all emphatically dismissed any suggestion they could do a deal on a currency union between an independent Scotland and the rest of the UK.
Experts on a fiscal commission established by the Scottish Government to consider the issue concluded a formal agreement allowing Scotland to use the pound after independence was both sensible and attractive for the rest of the UK.
But during his visit to Edinburgh in February, Mr Osborne insisted a currency union "is not going to happen''.
He added: "It is clear to me I could not, as Chancellor, recommend that we could share the pound with an independent Scotland.''
Mr Balls and Mr Alexander, currently Chief Secretary to the Treasury, adopted the same hard-line stance.
A currency union would "repeat the mistakes of the euro area,'' Mr Balls, Labour's shadow chancellor argued.
At the same time Mr Alexander said it was "crystal clear a currency union would create unacceptable risks both for Scotland and the rest of the United Kingdom''.
Mr Salmond, who wants to create a 'sterling zone' with the rest of the UK if there is Yes vote, branded that as being nothing more than a "concerted bid by a Tory-led Westminster establishment to bully and intimidate''.
Just days after the three Westminster parties had rejected a currency union, the SNP leader defended his plan, arguing that forcing Scotland to use an alternative currency would cost businesses south of the border "many hundreds of millions of pounds'' in transaction charges.
He also warned Mr Osborne and his pro-Union allies that their "diktat'' would backfire on them.
"People do become sick and tired of the succession of day-tripping Conservative ministers flying up to Scotland to deliver lectures and then flying back again,'' he said.
"To be told there are things we can't do will certainly elicit a Scottish response that is as resolute as it is uncomfortable to the No campaign - it is 'yes we can'.''
Even if an independent Scotland could agree a currency union with the rest of the UK, such a deal could bring restrictions.
Bank of England governor Mark Carney said an effective currency union would force a newly independent Scotland to hand over some national sovereignty.
If the "necessary foundations'' for such an arrangement are not put in place, Mr Carney warned that eurozone-style crises could occur.
While an independent Scotland may or may not be able to strike a deal on a currency union, it could continue to use the pound anyway, by unilaterally adopting sterling as its currency in the same way Panama uses the US dollar.
This would leave Scotland without a lender of last resort, and would mean politicians in Edinburgh would have no control over factors such as interest rates, which would continue to be set by the Bank of England.
It is issues such as this that have led to some in the pro-independence campaign to argue Scotland should have its own currency.
Dennis Canavan, chairman of the main pro-independence campaign Yes Scotland, has said this would "give us more flexibility, more freedom''.
While he said he could "live'' with keeping the pound if Scotland left the UK, he argued: "If Scotland were to have its own currency then it would have far more freedom to do its own thing, and it would have a full range of economic levers to determine its own economic policy.''
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