It is "unlikely" Scotland could continue to use the pound if the country votes for independence at this year's referendum, according to Citigroup.
The bank stated that it was "astonishing" the Scottish government has not come up with a currency union alternative with just a few months to go before the vote takes place.
Scotland's fiscal deficit was described in the bank's report as being "now significantly above UK levels" because of a recent fall in oil revenues. It was also noted Scotland's banking system is "large" and the nation's bank assets of more than 1,000 per cent of Scotland's annual GDP could be problematic in the event of independence.
Citigroup said: "We regard a sterling monetary union as unlikely, but we are genuinely unsure what currency and monetary policy would be adopted by an independent Scotland.
"In our view, it is astonishing that the Scottish government, in seeking independence, has reached this stage: seeking a currency union without agreement with the rest of the UK and without a clear alternative plan."
The currency union is one of the main areas of debate leading up to the referendum, which is taking place in September. Crawford Beveridge, the head of the Scottish government's fiscal advice group, recently stated that Scotland could continue to use the pound if the vote result is a yes this autumn.
Chancellor George Osborne is adamant that an independent Scotland would not be able to retain the pound and the economic governance of the Bank of England, but Mr Beveridge claimed Mr Osborne was not "serious". Chief secretary to the Treasury Danny Alexander and shadow chancellor Ed Balls are also on the record as being against a currency union with Scotland.
Citigroup analysts also estimated that the borrowing rate for an independent Scottish government could be set at around one-and-a-quarter percentage points higher than the UK level currently stands at. The UK's base rate of interest has stood at a record low for the country of 0.5 per cent for the last five years.
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