George Osborne has warned Scottish voters that if they vote to break away from the United Kingdom, an independent Scotland would not be able to keep the pound.
The Chancellor said the prospect of an independent Scotland keeping the pound in a formal currency union arrangement with the rest of the United Kingdom was "not going to happen".
"If Scotland walks away from the UK, it walks away from the UK pound," he said.
Osborne hit out at claims made by Scottish first minister Alex Salmond that the pound belongs to both Scotland and the rest of the UK, saying that the currency was not a "CD collection that can be divided up".
He insisted that there was no legal reason for the rest of the UK to share the pound with Scotland, adding: "I could not as chancellor recommend that we share the pound with Scotland.
"The evidence shows that it would not work and it would cost money and it would not provide economic security for the rest of the United Kingdom."
He urged Scots to vote to "stay within our family of nations here in the United Kingdom" and keep the pound and the "economic security it brings".
Osborne said that the United Kingdom has "avoided the economic collapse other nations around us in Europe faced because together, we had the strength to confront our problems and overcome them".
"We've had six consecutive quarters of Scottish growth," he said.
"Growth not just in services, but in manufacturing and construction too. Over 100,000 new jobs have been created in Scotland in the last four years - 65,000 fewer people unemployed compared to 2010."
Scotland is now "one of the most economically successful parts of the UK" with "far more stability and less volatility", Osborne said.
Osborne has received support from the Liberal Democrats and Labour in ruling out any prospect of an independent Scotland keeping the pound. Deputy prime minister Nick Clegg told LBC radio this morning: "It is not an easy circle to square to say we're going to pull apart in one direction but keep the currency."
Liberal Democrat chief secretary to the Treasury Danny Alexander said that he couldn't back a currency union and that his party wouldn't agree to it either.
Shadow chancellor Ed Balls said: "What we have now seen after the turbulence of the last few years [of the euro] is that this [a single currency] is this a pretty unattractive prospect for Scotland. More than that it would require joining a more onerous banking union, a big fiscal union, political integration.
"So that option is off the table. What is he [Alex Salmond] doing? He is trying to say somehow Scotland can be independent, break from the rest of the UK but still use the pound sterling. That would require integration, it would require a banking union, a fiscal union, a political union. There is a fundamental intellectual problem for Alex Salmond. He wants to break from the UK but also keep the pound even if that means a closer relationship to the UK. You can't have your cake and eat it."
Scotland's deputy first minister Nicola Sturgeon said Osborne's speech was a "panic move which will backfire spectacularly".
She added: "People won't take kindly to the Westminster establishment ganging up to try and bully Scotland in the decision that we are being asked to take on the referendum."
"We have set out a reasonable case that we should continue to use our pound because it is ours as much as it is anybody else's. Neither George Osborne nor anyone else can stop Scotland using the pound, which is just another reason why having a formal currency union will be in Westminster's overwhelming interests."
Bank of England governor Mark Carney warned last month that Scotland would lose some of its independence if it left the United Kingdom and pursued a currency union with the rest of the United Kingdom.