I am NOT an economist, I am an Engineer and a pragmatist. So I am not qualified to advise on such matters but can apply logic and common sense.
Scotland can likely use the Pound Sterling unofficially or any other currency for that matter.
In that situation it would have no independent financial borrowing powers and its economy wouldn’t be tied to the currency. It would be a ludicrous situation, like many third world countries, where transactions could be better done by the exchange of goods.
Scotland could negotiate with the Westminster Government to use the Pound Sterling officially but have already been told that this option is NOT available. So, Alex Salmond is now suggesting the Pound Sterling is already the Scottish currency and does NOT need the consent or approval of Westminster to continue using it.
He also said that if Westminster agreed to let Scotland use it in a currency union with the rest of the UK then they would take on their proportion of the UK debt. If Westminster didn’t agree then they would use it without taking on their proportion of the debt.
If Westminster did a U-turn and agreed a currency union then what exactly has the independence referendum achieved? They already have a whole swathe of self governing powers and one of the reasons to obtain true independence is to achieve control of the economy and currency and to set taxes according to structural needs.
Within a currency union, even if consultation was ongoing between the partners regarding day-to-day currency value, the tax setting powers will be dominated by the partner with 90% of the total population, just as it is now.
If Scotland decides to use a unique currency or a Scottish version of the pound, like Ireland used to do, then it has to float this on the international money markets and accept a period of uncertainty and maybe massive fluctuations in its value. If it does the honourable thing and leaves the UK taking its proportion of the UK debt, then it starts from an almost bankrupt position requiring the IMF to under-write that amount. If it tries to renege on this debt then who will want to do business with them, or lend them any more money?
Frankly I wouldn’t want to be in Scotland just now. If independence is achieved by this referendum and a currency union is agreed, then the Scottish parliament will be in conflict with Westminster by trying to gain all the advantages of independence without any of the liabilities. If a unique currency is created, this will be followed by a few people making a lot of money during the conversion and the majority of people losing the value of their savings and looking forward to massive inflation.
That how I see it.