When I wrote a couple of weeks ago that the currency of an independent Scotland would have to be the pound sterling, I never suspected the question was about to embark on a rapid rise up our order of priorities. While it may be still some distance from the top, it is bound to get higher and higher now that the actual Brexit is only a couple of years or so away.

We may not have heard much about it amid the turmoil of the last week. We soon will.

Whether or not Scotland becomes independent at the same time as Brexit, my basic point remains the same. In or out of the UK, in or out of the EU, Scotland can use the pound. This will not be because the government in London tells us what to do or what not to do, but because the pound is an international reserve currency open to absolutely anybody to use, from a modest corner shop in Govan to a multinational company anywhere in the outside world.

The only way for Westminster to alter this situation would be to impose exchange controls – that is, restrictions on the movement of currency between the City of London and foreign countries. That would spell the end of the City as an international financial centre. It could never be done. Yet I keep reading or hearing from media commentators in Scotland that we somehow need the permission of the Bank of England to use the pound. It’s rubbish.

Let me quote again the words of Mervyn King, ex-governor of the Bank. Of the currency in an independent Scotland he said: ‘Nothing happens. Scotland just carries on using sterling. I think that would have been totally feasible.’

The point at issue is not whether we can use sterling but the framework within which we use it. Alex Salmond proposed that, after Scottish independence, we should enter into a formal currency union with the former UK, set out in some sort of treaty. The idea was rejected by George Osborne, who answered back that ‘if you walk away from the UK you walk away from the pound’. This, however, was just part of Project Fear, and no truer than the rest of it. But if London wants to rule out formal currency union, let’s rule it out.

What happens in an independent Scotland that keeps sterling without a formal currency union? There seem to me to be two prime practical consequences.

One is that the Bank of England would no longer consider Scottish interests when it determines monetary policy. Wow, there is reason for weeping and wailing and gnashing of teeth! I dare say it will come as news to most of us that the Bank of England ever did consider Scottish interests. If it did, this is not a part of life in the UK we are going to miss.

A more serious point is that Scottish banks with problems of liquidity would no longer be able to use the Bank of England as lender of last resort – the role it played for both Bank of Scotland and Royal Bank of Scotland by bailing them out when they looked to be going bust in the financial crash of 2007-08.

These banks’ bitter experience might be their best teacher for the future, but the lessons would be reinforced if we decided to do without a legal lender of last resort within Scotland. There was none in our own old banking system, the one the Bank of England shackled in 1845.

That system’s watchwords were prudence and caution. It was ultimately backed by holdings of gold but, as Karl Marx noted, there was never a time when Scots lost confidence in their own money and demanded payment in gold. In this judgment, he stood shoulder to shoulder with my own mentor Friedrich von Hayek (and with Scottish revolutionary John Maclean).

But this is not all ancient history. There are still countries following the same system even in the globalised economy of today. Panama is a good example. Since 1903 it has used the US dollar just in the way independent Scotland would again be using the pound. Panama is a prosperous country, as rich as EU members Croatia or Hungary. It can attract huge foreign investments: we saw an example the other day when the first Chinese super-freighter passed through the newly expanded Panama Canal.

The International Monetary Fund, no less, has given the Panamanian system its seal of approval: ‘By not having a central bank, Panama lacks both a traditional lender of last resort and a mechanism to mitigate systemic liquidity shortages. The authorities emphasised that these features had contributed to the strength and resilience of the system, which relies on banks holding high levels of liquidity beyond the prudential requirement of 30 per cent of short-term deposits.’ Panama is in fact ranked seventh in the world for the soundness of its banks. That, to put it mildly, is a bit better than Scotland.

We once taught Panama: what can Panama teach us today? Well, we still have three banks issuing their own notes as they have done since before 1845. In an independent Scotland, the banks could continue to issue these notes and still, as it says on them, “promise to pay the bearer on demand £20 sterling at their head office here in Edinburgh”. We may take that literally: English pounds would now be the base money used by Scots banks to back their currency, in the same way as gold was before 1845.

The system would be all the easier to operate because our three note-issuing banks are at best Anglo-Scottish, or in one case Anglo-Australian. In reality they already have their headquarters in London, and for historical reasons just happen to retain a large number of branches in Scotland. I don’t like saying this about a system which, until 2007, had against all the odds survived three centuries of Union. But it happens to be true.

We may regret what these Anglo-Scottish banks have come to, yet it will actually make the independent nation’s continuing use of sterling easier. The assets they hold in London far exceed the currency in circulation north of the Border (M1 in the jargon), by about £4 billion. If Scotland ever does need a lender of last resort, London is where we’ll find one.

But I don’t think we’ll need one. Under the arrangement outlined here the banks in Scotland would have to return to their lost provident habits. And this in the end is what you want of your banks, not the razzmatazz, the financial jiggery-pokery that in 2007 led all those once-sober Scots bankers down the road to hell.