Scotland could keep the pound, but probably not in the way it wants

Ahead of the Scottish independence referendum in September, the not-insubstantial matter of which currency Scotland would have remains starkly unresolved.

The UK government reiterated its position this weekend. Topping its list of five ways people in Scotland will benefit from staying in the UK was:

"1. Keep the pound. Staying in the UK is the only way Scotland can keep the strength of the Bank of England and the pound as we have now."

The Scottish government has been just as firm to the contrary:

"An independent Scotland will keep the pound."

As we've explored in our Spotlight on Scotland's future currency, neither the UK or Scottish government can have its way completely.

The Scottish government wants a formal currency union with the UK, meaning it would keep the pound. But this would need negotiation with the rest of the UK, and all three major UK parties oppose the plan, suggesting it's unlikely to happen in practice.

At the same time, the UK can't stop Scotland continuing to use the pound without a formal union, although that would leave an independent Scotland with little control over monetary policy - which could have knock-on effects on its financial sector.