George Osborne has suggested an independent Scotland would not be able to keep the pound as its currency, as he spoke of "taking the fight" to the SNP.
Speaking on ITV news on Thursday evening, the chancellor said Scotland's first minister would have to explain what his plans are for the currency of Scotland if it left the United Kingdom.
"Alex Salmond has said Scotland should join the euro that means giving up the pound, joining the euro, that is not the currency I’d be wanting to join at a time like this," he said.
The SNP has said an independent Scotland would join the European Union. Countries that join the EU are required to join the single currency as part of the accession deal. However Osborne refused to say whether the Scots would be allowed to keep the pound following separation and the decision to join the EU.
Osborne said that he thought Scotland would "lose out" and would not be as prosperous as it would be if it remained part of the UK. "I think profoundly it would not be good for Scotland or for the UK and it wouldn't be good for the people of Scotland in terms of the health of the Scottish economy," he said.
His intervention could be seen as an attempt to turn any future referendum on Scottish independence into a choice for between Pound Sterling and the single European currency, which he said had "been very damaging for the whole of the world".
Osborne, who chairs a ministerial committee on Scotland, is taking a leading role in fighting the SNP's call for the break up of the UK.
"I think at last we are taking the fight to the separatists," he told ITV. "Those who do not want to see this country pulled apart are now putting their arguments together and what's interesting is you see when you put some pressure on the SNP you can quite quickly put them on the back foot."