While independence may be attractive, how Scotland plans to manage its currency should provide a reality check for voters

A Scottish currency is still likely to be the toughest test for Holyrood

There is no doubting the emotional appeal of independence. For many Scots the positive lure of self-determination is perhaps matched only by the satisfaction of banishing control from Westminster.

But the economic realities for a small nation fending for itself in sometimes stormy seas should be paramount in voters' minds on Thursday. Ireland's government spent prudently ahead of the banking crash, as did Spain's, but both had a weak spot – property. Scotland's vulnerability would be its currency.

Much of the argument has centred on the transition costs of setting up a new nation – with the estimated £2.5bn cost of establishing replica institutions. The loss of jobs as UK public sector roles move south and banks shift their head offices to London would be another blow to the Edinburgh exchequer.

Moreover, there is the need to find £34bn of foreign exchange reserves to insure the finance sector, after a split with the UK that would probably only leave Scotland with £16bn.

That shortfall of £18bn should be seen in the context of the £64bn total public spending for Scotland in 2011-12, according to Holyrood estimates. (This includes all spending for the benefit of Scotland by every tier of government in the UK.)

Making cuts or tax rises over the first few years of independence to cover the extra spending is going to be difficult.

Ronald MacDonald, professor of political economy at the University of Glasgow, puts the ballpark cost of setting up a separate currency at £40bn. He uses Denmark, Norway and Sweden as his benchmark.

It's difficult to see how that money could be raised when MacDonald estimates an independent Scotland, even including oil revenues, will have a balance of payments deficit of up to 5% and a projected budget deficit of 5% of GDP.

Looking further ahead, Scotland must tackle concerns that tracking the pound with a Scottish currency, with or without the UK's permission, is incompatible with sovereignty.

Dhaval Joshi, an analyst at the consultancy BCA Research, is scathing about the likely success of any currency union.

"If the past few years of euro crisis have taught us anything, it is that sharing a common currency with a large and dominant neighbour is a recipe for disaster when there is no underlying banking and/or fiscal union," he says.

Worse, there is the vulnerability of a small nation left to the mercy of international money markets. MacDonald recommends an independent Scottish currency as the least bad option. In the event of investor flight, a Scottish lira/dollar/punt could be allowed to collapse in value to allow an export-led recovery.

But there would be higher interest rates to pay on the national debt. Also, it doesn't seem to matter whether a small country is in or out of a currency union when the chips are down. Ireland and Spain – inside the euro – will be paying their banks' debts for decades. Denmark – outside the euro – is still struggling with huge debts from its own property crash.

Of course, the UK, too, succumbed to a property bubble, but it was big enough, rich enough and – with its own central bank – able to bluster its way through the crisis. An independent Scotland is unlikely to find the money markets in such a generous mood.