Nicola Sturgeon has rejected calls for a fallback position for currency if the rest of the UK refuses requests for an independent Scotland to be part of a formal sterling zone.
The Deputy First Minister said she does not support proposals for a new Scottish currency, during a conference on the economics of independence in Edinburgh.
She was questioned about the Scottish Government’s position after setting out her case for the future of the country.
Alistair Darling, leader of pro-Union campaign Better Together and a former Chancellor, set out his case for Scotland remaining in the UK and said there must be a “plan B”.
Mr Darling said: “I’m very clear that if you go into a currency union two things need to happen.
“One is that the other side has to agree. Whether you like it or not, you cannot guarantee that.”
Any deal would come with terms and conditions, he said.
“The problem that Nicola will have is that whatever those terms and conditions are, if you won’t look at any other option you’re stuck with whatever the other side is prepared to offer.
“That just seems to put yourself in a very weak negotiating position. I’m not going along saying it won’t work. What I’m saying is you’re moving to a situation which I think is deeply unfavourable to Scotland.
“We’re putting ourselves in a straitjacket.”
Ms Sturgeon said rejecting a currency union would be “incredible”.
She said: “This is where the credibility gap comes in.
“Is Alistair seriously arguing that a UK Government is going to turn around to its own businesses and say, ‘we’ve got your second biggest trading partner that wants to stay in a currency union and we’re going to say no to that’. It is incredible.”
She accepted there will be a “stability pact” between governments but insisted the UK administration “won’t cut off its nose to spite its face”.
Ms Sturgeon said earlier that while she does not favour a separate currency, there are different views in the pro-independence Yes Scotland movement.
Former Labour MP Dennis Canavan, chairman of the group’s advisory board, and the Scottish Green party leadership have called for a separate currency to be considered.
“I’m not going to speculate on a future Scottish currency because it’s not my preferred option,” Ms Sturgeon said.
Success for the pro-Union side rests on convincing voters that independence is too risky, she told the audience inside the National Gallery of Scotland.
“We want the fiscal powers here to get our economy growing, to deal with the inequalities that I’ve spoken about, while working where it makes sense for us with the UK in a sensible way,” she said.