- Legal tender - the exclusive authority to designate the legal tender forms of payment.
- Issuance and retirement - the exclusive authority to control the issuance and retirement of the legal tender.
Powers and evidence of monetary sovereignty
Issuance and retirement
The state alone is empowered to control, either directly or through institutional and regulatory mechanisms, the issuance and retirement of the legal tender.
Incidence of monetary sovereignty
Currently, nations such as the USA and Japan, which have autonomous central banks and borrow in their own currencies are said to exercise a high degree of monetary sovereignty. On the other hand, the European Union nations, have ceded much of their monetary sovereignty to the European Central Bank.
Other monetarily non-sovereign entities
In the United States, a Monetarily Sovereign government, there exist many monetarily non-sovereign entities: villages, cities, counties, states, businesses and individuals. None use their own sovereign currency, so having no sovereign they:
- Do not have the unlimited ability to create their sovereign currency
- Can run short of currency (unlike Monetarily Sovereign governments, which cannot run short of their sovereign currency)
- Require income in order to pay their bills (unlike Monetarily Sovereign governments, which require no income). Thus, taxing, borrowing and austerity (deficit reduction) are not necessary though for political reasons, a Monetarily Sovereign nation may borrow and levy taxes and enforce austerity.
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