Heavy pounding by allied forces

British pound coins Image copyright bbc
Image caption The implications of an independent Scotland continuing to use sterling has raised questions

The "pound in your pocket" is one of the more powerful phrases in British politics.

It evokes security, reliability, something that belongs to you, and you keep it close.

The pound is surely the symbol of Britishness that people hold dearest, going to considerable lengths to earn or otherwise procure lots more of them.

Harold Wilson famously used "the pound in your pocket" phrase in 1967, having been forced to devalue said currency.

He told people it wasn't worth any less. Of course, it was.

To listen to some of the exchanges on the future of Scotland's currency under independence, you can sense the early stirrings of what could become a potent campaign theme for the pro-union parties.

'Fantasy' tax rates

It doesn't require opposition leaders to "talk down Scotland" or to argue that Scotland's too wee to decide things for itself. All it requires is that a seed of doubt be sewn about the security of Scots' earnings, savings and loans.

Some of these stirrings were at First Minister's Questions last week, querying the implications of an independent Scotland continuing to use sterling.

Alex Salmond dismissed the claims of UK Treasury control of an independent Scotland's monetary policy by pointing out the Treasury gave up such control 15 years ago.

Indeed it did. But it handed it to the Bank of England. That's still a long way from Scottish control over its monetary destiny.

Then there's the fiscal controls. Professor John Kay, a former economic adviser to the First Minister, was quoted at the weekend rubbishing as "fantasy" the idea that Scotland could cut corporation tax to Irish levels. Its European partners wouldn't let it, he suggested.

Greek dignity

And the even greater pressure building in the eurozone this week is a reminder of how currency alliances can go horribly wrong.

Germany appears to be losing patience with Greece.

If it wants to stay in the euro, Athens is being told it may need oversight of its budget by a commissioner in Brussels. Understandably, that doesn't fit well with Greek national pride and dignity.

Having said an independent Scotland would stick with sterling, at least until a referendum to join the euro, the response to the currency debate from Alex Salmond and his deputy, Nicola Sturgeon, is that it's perfectly normal to be in a currency alliance.

Around two-thirds of UN members are in such alliances, it's pointed out.

And they're independent countries, aren't they? Yes, but how economically independent?

Just how normal is it to hand over control of your currency, monetary and large elements of fiscal policy, to an alliance - often with one very dominant member? In other words, what kind of club would Scotland be joining?

Papal payments

Well, for guidance, take a look at the list of 67 countries in such alliances, provided with the help of the Scottish government.

Image copyright Other
Image caption The US dollar is the main currency for nine countries

The eurozone is the main one, with 17 members. Three more are linked to it without the clout in deciding policy of its full members, including the Vatican and Monaco, and three more peg their currencies to it informally, including Kosovo and Montenegro.

Sixteen former French and Belgian colonies in Africa take part in three versions of currency union, so alliances are made to work from Burkina Faso to Togo.

The US dollar is traded almost everywhere, but it's the main currency for nine countries, the most significant being Panama and Ecuador.

One of the less attractive monetary role models using the mighty greenback is Zimbabwe (having failed to exercise any discipline over its own, hyper-inflated currency), while it's also used in the Federated States of Micronesia.

Three other micro-states in the Pacific use the Australian dollar.

Wellbeing and rupees

Seven small island states in the east Caribbean have their own currency union, though you'll have to use euros in French Martinique.

In Bhutan, where they measure the high altitude economy by its human wellbeing count, money is exchanged in Indian rupees. Lichtenstein uses the Swiss franc (Well, you would, wouldn't you?). And South Africa's rand is used in neighbouring Namibia, Lesotho and Swaziland.

These tend to be very small countries, looking to - or dominated by - much bigger neighbours. Outside the eurozone, it's hard to find a parallel to a significantly-sized, developed, trading nation like Scotland, other than the currency alliance between Singapore and Brunei.

Inside the eurozone, it's hard to find anyone who thinks the currency alliance is working well, at least so long as its members insist on the autonomy they've enjoyed over the past decade.

So just how normal do currency unions look now, or for a country looking to gain its independence?

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