A CURRENCY union between an independent Scotland and the rest of the UK would give the new state flexibility over economic policy making but not the safety net of a banking bailout, according to a new analysis.

In a study which contradicts claims by both the UK and Scottish governments, experts from the National Institute of Economic and Social Research argue that a formal deal to share the pound, if talks could be agreed, would resemble "dollarisation".

The term refers to the arrangement by which some countries, such as Panama with the US dollar, use another state's currency.

It indicates a looser relationship than that envisaged by First Minister Alex Salmond, who proposes a currency union in which an independent Scotland would accept some limits on its ability to borrow in exchange for the UK Government standing ready to support Scottish banks.

The main UK parties have all ruled out holding talks about a currency sharing deal in the event of independence, arguing it would be in neither country's interests.

But in their new report, economists Dr Angus Armstrong and Dr Monique Ebell argue that, if negotiations did take place, the the difference in size between Scotland and the rest of the UK means they would produce "an arrangement that resembles dollarisation" in practice.

An independent Scotland would have no control over monetary policy but, contrary to warnings by some experts, the rest of the UK would not impose limits on how much Scottish ministers could tax, borrow or spend.

However, the UK would also have no reason to bail out banks based in Scotland, a factor which "may encourage" institutions to relocate south of the Border, the analysis suggests.

Overall, the economists conclude: "This would be a deliverable outcome by two sovereign countries negotiating in their self-interest but whether it would be a stable currency regime is an entirely separate question."

The study came as MSPs at Holyrood heard a range of expert views on possible currency arrangements for an independent Scotland.

Professor John Kay, of the London School of Economics and a former adviser to Mr Salmond, told the parliament's finance committee he was "sceptical" about the chances of a currency union being agreed if Scots vote Yes in the referendum.

Referring to Chancellor George Osborne's statement ruling out the proposal, he said: "I don't think the announcements that have been made from Westminster this year rule out the possibility of having a currency union, if Scotland did indeed vote for independence, but they clearly make it more difficult."

Professor Gavin McCrone, a former chief economic adviser to the Scottish Office, told the committee he believed it was "more likely in the end" that Scotland would adopt its own currency, probably pegged to sterling.

Meanwhile, in evidence to Holyrood's economy committee, Professor Michael Keating, of Aberdeen University warned tax hikes would be required to fund the SNP's post-independence pledges.