The UK Government has been exposed for "scaremongering" over threats to rule out a currency union with Scotland after independence, according to Finance Secretary John Swinney.
The political row reached the Scottish Parliament four days after an anonymous UK minister told the Guardian newspaper that "of course" there will be a deal to formally share sterling if there is a Yes vote on September 18.
It appears to undermine the clear public position of Chancellor George Osborne and leaders of the other main Westminster parties who have all ruled out the key Scottish Government proposal.
Mr Swinney said the "admission" demolishes a central argument against independence.
"The opinion polls have clearly indicated that people in Scotland do not believe the bluff we've heard from the United Kingdom Government ministers and their allies in the Labour Party," Mr Swinney told MSPs at Holyrood.
"What further demolishes the argument is the revelations at the weekend that the private chit-chat within the UK Government is that of course there would be a currency union.
"I think that helps people in Scotland to make it absolutely clear that the UK ministers that have tried to essentially scaremonger on this question have been found to have been seriously wanting in the way in which they have set out their arguments to the people of Scotland."
He was responding to SNP backbencher Jamie Hepburn who referred to an opinion poll showing people are more likely to think the unionist parties are bluffing when they say there will be no currency union.
A YouGov poll for The Times newspaper last week suggested 45% of Scots do not believe Mr Osborne's threat is real, compared with 40% who think he means what he says.
The Guardian reported on Friday night that an un-named minister had acknowledged opposition to sharing sterling was a vital part of the strategy ahead of the referendum.
The minister said: "Of course there would be a currency union."
He added: "You simply cannot imagine Westminster abandoning the people of Scotland. Saying no to a currency union is obviously a vital part of the No campaign. But everything would change in the negotiations if there were a Yes vote.''
In Holyrood, Labour MSP Drew Smith questioned why the SNP would want a currency union in the first place, and highlighted division on the future currency among independence campaigners.
"Why does one unnamed source in London give him such confidence when there are so many named sources in the Yes campaign arguing just as strongly against a eurozone-style union as anyone in the UK Government?" he asked Mr Swinney.
Conservative MSP Gavin Brown referred to further quotes attributed to the un-named government source which suggested the Scottish Government could do a deal for currency by accepting the Trident nuclear deterrent can stay north of the border.
But Mr Swinney responded: "I came into politics with the objective of getting Trident and nuclear missiles out of Scottish waters and I have absolutely every intention of making sure that is exactly what happens after a Yes vote in the referendum."
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