George Osborne said it is "unlikely" the United Kingdom would agree to a sterling currency union that could threaten its own economy, London's The Guardian reported Wednesday.
"Lets stop speculating and look at the evidence," Osborne said. "Could a situation where an independent Scotland and the rest of the U.K. share the pound and the Bank of England be made to work?"
Scottish Finance Secretary John Swinney said the Treasury was "playing with fire" by deploying arguments that implied Scotland would no longer be able to use sterling if it voted for independence, The New York Times reported.
Osborne's remarks followed the release of a Treasury report Tuesday warning that an independent Scotland would "have a narrower economic and fiscal base, and be exposed to a number of volatile sectors such as finance and energy."
A separate report commissioned by the Scottish government considered the options of keeping the pound, joining the euro, having a Scottish currency pegged to sterling or having a currency that was fully flexible.
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