I'm not going to do an about face straight away - maintaining a position for just three weeks isn't what you would call steadfast - but it's worth considering why there might not be a currency union, what that does to the Nationalist case, and whether it makes a blind bit of difference to the outcome of the referendum.
There are economic reasons for not having currency union, as you might expect. As Sir Nicholas Macpherson, Permanent Secretary to the Treasury, wrote to George Osborne last week, "Successful currency unions are based on the near universal belief that they are irreversible". Moreover "Scotland’s banking sector is far too big in relation to its national income, which means that there is a very real risk that the continuing UK would end up bearing most of the liquidity and solvency risk which it creates". Thirdly the rest of the UK "would be at risk of providing taxpayer support to the Scottish financial sector and sovereign. An independent Scottish state would not face the same risk as it is inconceivable that a small economy could bail-out an economy nearly ten times its size . . ."
"Finally," Macpherson concludes, "Treasury analysis suggests that fiscal policy in Scotland and the rest of UK would become increasingly misaligned in the medium term. Of course, if the Scottish Government had demonstrated a strong commitment to a rigorous fiscal policy in recent months, it might be possible to discount this. But recent spending and tax commitments by the Scottish Government point in the opposite direction, as do their persistently optimistic projections of North Sea revenues, which are at odds not just with the Treasury but with the Office of Budget Responsibility and other credible independent forecasters".
Alex Salmond's supporters counter these arguments with the views of their own Fiscal Group (including, as the Nationalists always say, two Nobel prize winners). This group's report suggests a currency union is perfectly possible.
Which it is. I don't think anyone seriously disputes that a currency union could take place, and I'm absolutely sure there are economic arguments in favour as well as arguments against (the most obvious reason currency union might be good for rUK is the threat of transaction costs for some cross-border businesses, although the Yes campaign would probably argue these would be offset by lower English tax rates post-independence).
But to assume that the existence or otherwise of a currency union will depend on economic arguments is naive of both sides, particularly so of Alex Salmond. It will depend instead on realpolitik.
The Nationalists will demand a currency union. Westminster will refuse. The Nationalists then say they won't accept Scotland's share of the national debt. That is also possible, but consider this.
Without a currency union Scotland will have no central bank, no lender of last resort and no control over interest rates. This is serious for many reasons, one of which is that, as Macpherson noted, Scotland has an outsized banking industry employing an awful lot of people which will be threatened by being inconveniently sited in a country other than the one with which it does most of its business; post-independence the Bank of England will not be bailing that industry out.
(Interestingly, a couple of days after I posted this, Lloyds, technically a Scottish company, announced that its new 600-branch TSB business is to be incorporated in London instead of Edinburgh. There's a report here. The banking sector is not taking any chances)
Like the rest of the UK, Scotland will be running a deficit, and it will have to borrow on the money markets from day one. How is it going to do this if it has just walked away from all its existing debts?
A couple of weeks ago the Treasury did something rather strange. It announced that post independence it would assume responsibility for Scotland's debts come what may. This was billed as a sop to the markets, but I wonder whether it was something more.
According to the NIESR, Scotland's share of our historic debt is in the region of £150 billion. It is only about a tenth of Britain's total historic debt, and, to put it in context, roughly the amount Britain had to borrow in one year at the height of the last recession. It might be possible to imagine David Cameron shrugging his shoulders and saying, "So walk away. The money markets already know that we're on the hook for the total sum. It'll make no difference to our bond yields. Walk away from the debt, but no currency union. Ever".
Actually I can't imagine Cameron shrugging his shoulders. That isn't his style. But it is George Osborne's style. And behind this Treasury manoeuvre lies the MP for Tatton.
Alex Salmond is a master tactician and a brilliant poker player. But he is a poker player with a truly terrible hand, and his ability to wing it has run out of road. His response yesterday was angry and incoherent. Westminster's ruling out currency union was "demeaning and insulting". Anyone would think a country no longer in the UK had some kind of right to a currency union.
There is, as someone pointed out in the Guardian this morning, an element of "we're getting a divorce but I want to keep using the car" about all of this.
Unlike Alex Salmond, George Osborne is a strategist. Only a strategist would co-ordinate the Treasury's pledge on the debt months before it could possibly become a live issue, and raise the issue of currency union in time for wavering Scots to get angry but then to calm down sufficiently to see the problem. Tantalisingly, Osborne has left the Nationalists time to come up with a Plan B. But this too would be a trap, because the adoption of a Plan B would open Salmond to the accusation that he is making policy up as he goes along.
There is one other matter of realpolitik worth considering. It is that post-independence there will be no electoral advantage to be had in England in being nice to Scotland. Even if the economic arguments overwhelmingly favoured a currency union (and they don't, not overwhelmingly), politicians don't necessarily do the sensible thing, not when their voters are telling them otherwise.
You might imagine that weaknesses of the Nationalist case which the scrapping over currency union reveal would be desperately damaging to Alex Salmond. But it might actually make no difference at all. I heard some vox pop Scotiae on The World Tonight last night. The level of ignorance and disengagement was quite staggering. It was of the "What fur wud they tak awa' the poond?" variety. Such people, with no understanding of the economic issues which make or break the case for independence, have a vote. And their resentment at the home truths currently emanating from Westminster is very easily exploited by Alex Salmond. He might have lost the argument, but could still win the war.
