Nicola Sturgeon has rejected calls for a fallback position for currency if the rest of the UK refuses requests for an independent Scotland to be part of a formal sterling zone.
The Deputy First Minister said she does not support proposals for a new Scottish currency, during a conference on the economics of independence in Edinburgh.
She was questioned about the Scottish Government's position after setting out her case for the future of the country.
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Alistair Darling, leader of pro-Union campaign Better Together and a former Chancellor, set out his case for Scotland remaining in the UK and said there must be a "plan B".
Mr Darling said: "I'm very clear that if you go into a currency union two things need to happen. One is that the other side has to agree. Whether you like it or not, you cannot guarantee that."
Any deal would come with terms and conditions, he said.
"The problem that Nicola will have is that whatever those terms and condition are, if you won't look at any other option you're stuck with whatever the other side is prepared to offer. That just seems to put yourself in a very weak negotiating position.
"I'm not going along saying it won't work. What I'm saying is you're moving to a situation which I think is deeply unfavourable to Scotland. We're putting ourselves in a straight-jacket."
Ms Sturgeon said rejecting a currency union would be "incredible".
She said: "This is where the credibility gap comes in. Is Alistair seriously arguing that a UK Government is going to turn around to its own businesses and say, 'we've got your second biggest trading partner that wants to stay in a currency union and we're going to say no to that'. It is incredible."
She accepted there will be a "stability pact" between governments but insisted the UK administration "won't cut off its nose to spite its face".
Ms Sturgeon said earlier that while she does not favour a separate currency, there are different views in the pro-independence Yes Scotland movement.
Former Labour MP Dennis Canavan, chairman of the group's advisory board, and the Scottish Green party leadership have called for a separate currency to be considered.
"I'm not going to speculate on a future Scottish currency because it's not my preferred option," Ms Sturgeon said.
Success for the pro-Union side rests on convincing voters that independence is too risky, she told the audience inside the National Gallery of Scotland.
"We want the fiscal powers here to get our economy growing, to deal with the inequalities that I've spoken about, while working where it makes sense for us with the UK in a sensible way," she said.
The issue is attracting international interest from other countries watching what is happening in the UK.
The exchange between the leading referendum figures was prompted by a question from a member of the Canadian High Commission in the audience.
He asked what the Scottish Government's position would be if currency union is not achievable.
Ms Sturgeon opened the conference by setting out her ambitions for Scotland should voters back independence in September next year.
Scotland already has reason to be confident and the principle of transferring powers from Westminster has been embraced, she said.
"We've decided it should be Scotland and not Westminster in charge of Scottish education and that it should be Scotland and not Westminster in charge of Scottish criminal justice policy," she said.
Prophesies of "doom" from the Unionist side are reminiscent of the campaign against devolution in the 1990s, she said.
"Those arguments were completely without foundation then and the same is true today," she told the audience.
"What we have seen instead in vital areas of our society and economy is that individuals, families, communities and businesses have enjoyed real gains from having decision-making power here in Scotland."
She also shifted the emphasis from oil and gas to other sectors, insisting Scotland has a diverse economy.
Food and drink, tourism and life sciences were highlighted as success stories.
Mr Darling repeated his view that Scotland would be too reliant on a volatile oil and gas resource and raised the prospect of another financial collapse.
"You'd be foolish to think they aren't going to go wrong again in future," he argued.
"I've always thought that the moment the last person who was around during the present crisis leaves the industry something else will go wrong because they just forget that you can't actually make money out of nothing."
He said he was able to bail out the banks as Chancellor because of the size of the UK economy.
The areas highlighted by Ms Sturgeon are successes because of the UK, he said.
The UK Government will help with oil and gas decommissioning costs, renewable energy is subsidised and universities benefit from wider research funding, he said.
Focusing on currency as the fundamental issue, he told the audience: "What is plan B if the first thing doesn't work out?"