A currency union between an independent Scotland and the remainder of the UK should be ruled out now because it is "bad politics" for both countries, an influential Tory MP said today.

Andrew Tyrie, chairman of the Treasury select committee, said recent remarks by Bank of England governor Mark Carney had illustrated the problems with the idea.

The Scottish National Party has suggested a currency union would be a viable option for an independent Scotland, allowing it to keep the pound without damaging cross border trade.

But speaking in a Commons debate on Scotland's place in the UK, Mr Tyrie said while currency union was one of the potential options, it was not one which should be taken.

He said: "In current economic and political circumstances I don't think this should be attempted... this is because primarily a British monetary union would need something dramatically tougher than eurozone rules - so tough that on both sides of the border... our respective electorates would not want it. And they would be right.

"It would amount to a common fiscal policy between two independent countries, a massive undertaking to design and sustain... it would mean pre-approval of budget proposals, it would mean accompanying that pre-approval with intensive and very intrusive oversight of budgetary outcomes, rigorous powers to insist on overshoots being corrected quickly would need to be backed up by credible sanctions for non-compliance.

"What this means in practice is the Bank of England and the Treasury would have the power to direct a large part of Scottish economic and financial policy - for example, the Scots would probably be required to seek their approval before they could borrow to build schools and hospitals.

"A currency union would have to be a two-way street - now is it realistic to expect the rest of the UK, much the bigger partner both economically and by population, to accept Scottish oversight of fiscal policy here?

"I don't think such arrangements would be acceptable to the electorate; what's more I doubt a majority could be mustered for them in this House of Commons.

"Whatever the economics of trying to create a currency union, it seems to me it is bad politics for these islands."

The Scottish National Party's Pete Wishart (Perth and North Perthshire) dismissed concerns over the problems of a currency union in an independent Scotland.

Intervening on Mr Wishart's speech, Lib Dem Sir Robert Smith (West Aberdeenshire and Kincardine) had warned Scotland would only have the illusion of independence if it kept the pound.

He said: "You are putting an emotional case for independence but you are also not really taking on board the wise words of the Governor of the Bank of England about the illusion of independence if you keep the pound sterling in an independent Scotland because you will be taking away the voice of Scotland from the decisions which will affect its very core monetary policy."

Mr Wishart replied: "I've had enough of that, you can't do that."

The SNP MP instead focused on the "tsunami of energy" that would be released with independence.

He said: "Our independence will release and ignite a tsunami of energy, creativity and imagination as we get down to the business of building and creating our new independent nation.

"A new nation according to our Scottish priorities, built on our sense of community, always securing the government that we vote for pursuing the agenda that we want."

Mr Wishart also took aim at the House of Lords, criticising former Scottish secretary Lord Lang of Monkton for "defiling the memory" of Scotland's war dead.

Lord Lang said last week that independence would "dishonour the sacrifices made in common cause of those who died for the UK".

Mr Wishart said breaking from the union would "wipe away that ermine-wearing, unelected chamber" from Scotland.

He said: "That bloated, unelected chamber stuffed full of party placement cronies and donors and they had the audacity to tell our nation what they should do.

"And then they also had the affront to defile the memory of our war dead and insult the many brave veterans who have served this country with distinction just because htey happen to support independence for our nation.

"One thing that we will get with independence - we will wipe away that ermine-wearing, unelected chamber from the face of Scottish public life and our nation."

Shadow Scotland Secretary Margaret Curran said: "The fundamental question (the people) are asking is will it make me better or worse off? It's not a surprise arguments about currency, about borrowing, and about financial regulation have dominated the debate so much so far.

"But what would the nationalist plans for the currency actually mean for families? According to independent experts it would mean higher interest rates. We have been told they estimate around 1.5% higher than the rest of the UK.

"But what does that actually mean in practice... it means in fact your credit card borrowing costs will be higher, it means if you buy your Christmas presents and pay them off throughout the year the costs of paying that off will be higher.

"And it means if you're trying to pay off your mortgage, it means it will take you longer in Scotland to do that."

Ms Curran said she had no doubt Scotland could survive as an independent country but added: "Surviving is not the same as thriving."

Scotland Secretary Alistair Carmichael said there were fundamental questions which the pro-independence campaign had simply not answered.

He said: "The currency we use is vital to all of us. For individuals buying food and paying off loans, for businesses paying employees, trading with one another across borders. For our banks and financial institutions and for, of course, Scotland's economy as a whole.

"Last week, the Governor of the Bank of England set out his views on currency unions in very measured and, as he described it, technocratic terms. Governor Carney highlighted the principal difficulties of entering a currency union, losing national sovereignty, practical risks of financial instability, and having to provide fiscal support to bail out another country.

"A currency union would involve giving up some national sovereignty over economic policy. Why would it be in an independent Scotland's interests to join a currency union? There would be severe limits to Scotland's economic freedom and there would be a risk of losing economic resilience and credibility."

And he told MPs: "No one should vote for an independent Scotland on the basis they will get to keep the UK pound sterling."