SNP plans to keep the pound if Scotland becomes independent would be in the UK's interests but would limit the economic policies of a future Scottish government, according to a new report.
Experts from leading Scots law firm Tods Murray said that, although a "difficult and complex undertaking," amending UK legislation to put the Bank of England at the heart of the SNP's proposed currency union would be possible.
They also argued it would be in the UK's interests to retain a formal role in the stability of an independent Scotland, not least to help deal with a possible future banking crisis.
However, writing in the Law and Financial Markets Review, Rod MacLeod and Hamish Patrick, of Tod Murray's banking and finance team, warned the proposals would restrict an independent Scottish Government.
Mr Patrick said: "There needs to be a greater appreciation that Scotland would have limited control of monetary policy as the junior partner in any currency union with the rest of the UK, and even less control if a currency union is rejected but Scotland still chooses to keep the pound.
"In return for central bank support from the Bank of England, an independent Scotland could be expected to underwrite failing UK banks in addition to Scottish banks in any future bank bail-out."
Mr MacLeod said: "If the rest of the UK were to reject a currency union with an independent Scotland, it would be a game-changing event for the 'Yes' campaign as it would mean having to remodel economic policies which currently rely on currency union and could require the Scottish Government to establish central bank operations and regulatory systems, potentially delaying the target date for independence in 2016."
The report supports SNP claims a sterling zone would be in the UK's interests.
First Minister Alex Salmond has ruled out other possible options, including Scotland's continued use of the pound on an informal basis or the creation of a new currency, if Scots vote for independence next year.
Cathy Jamieson, Scottish Labour's Treasury spokeswoman, said: "Scotland is already in a monetary union with the rest of the UK that works perfectly well. Why would Scots jeopardise that certainty and give up any say we have over monetary policy, as the SNP would have us do?
"John Swinney now admits he has no alternative to sterling and this would leave an independent Scotland in a weak position when it came to negotiating terms with the Bank Of England. It makes no sense."
A spokesman for Mr Swinney, the Finance Secretary, said: "We welcome this contribution to the debate. It will be in the best interests of both the Scottish and UK economies for an independent Scotland to continue to use sterling, as part of a formal monetary union.
"That is why we established the Fiscal Commission Working Group, whose comprehensive report set out detailed proposals for a currency union, including the merits of a shared central bank, and putting in place a fiscal sustainability agreement for both governments. This proposal would ensure deficits do not diverge significantly as part of a formal monetary union, but will also ensure an independent Scottish government has the full fiscal and economic freedom to vary tax and spending to deliver economic growth and to serve the best interests of the Scottish economy."
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