Monetary sovereignty

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Main article: History of money

Monetary sovereignty is the power of the state to exercise exclusive legal control over its currency, by exercise of the following powers:[1]

  • 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[edit]

Legal tender[edit]

The state alone is empowered to specify the media, called legal tender, which may be offered and must be accepted for the discharge of any debt.

Issuance and retirement[edit]

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[edit]

Currently, nations such as the United States 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.[2]

Other monetarily non-sovereign entities[edit]

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:

  1. Do not have the unlimited ability to create their sovereign currency.
  2. Can run short of currency (unlike monetarily sovereign governments, which cannot).
  3. 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.

See also[edit]


  1. ^ "The Legal Aspect of Money" by F.A. Mann, 5th edition, Oxford, 1992, pp. 460-78
  2. ^ Cohen, Benjamin J. (2000). The Geography of Money. Cornell University Press. pp. 47ff. ISBN 978-0801485138.