Monetary sovereignty

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

  • Legal tender – the exclusive authority to designate the legal tender forms of payment.[1]
  • Issuance and retirement – the exclusive authority to control the issuance and retirement of the legal tender.[2]
  • Bitcoin implications - it has been argued that cryptocurrencies such as Bitcoin put monetary sovereignty at risk. Boston University Professor Mark Williams issued a warning in 2014 about the negative impact on the ability of central banks to enact monetary policy if Bitcoin becomes widely accepted. “If not controlled and tightly regulated, Bitcoin—a decentralized, highly volatile and nationless currency – has the potential to undermine this longstanding bond between sovereign and its currency. Disrupting this link would impact monetary policy and well-established currencies. If Bitcoin is allowed to flow freely through the global capital markets, in it current embryonic state, it could harm nations, economies and global commerce.”[3]

Incidence of monetary sovereignty[edit]

Currently, nations such as the USA and Japan, which have autonomous central banks are said to exercise a high degree of monetary sovereignty. On the other hand, the European Union nations within the Eurozone, have ceded much of their monetary sovereignty to the European Central Bank.[4]

References[edit]

  1. ^ Nzaou-Kongo, Aubin (2020). "International Law and Monetary Sovereignty: The Current Problems of the International Trusteeship of the Cfa Franc and the Crisis of Sovereign Equality". doi:10.6084/m9.figshare.12808835.v3. Retrieved 5 December 2020. Cite journal requires |journal= (help)
  2. ^ "The Legal Aspect of Money" by F.A. Mann, 5th edition, Oxford, 1992, pp. 460-78
  3. ^ Williams, Mark T. "FINANCE PROFESSOR: Bitcoin Could Evolve Into An Existential Threat Worthy Of A Science Fiction Movie". Business Insider. Retrieved 2021-04-05.
  4. ^ Cohen, Benjamin J. (2000). The Geography of Money. Cornell University Press. pp. 47ff. ISBN 978-0801485138.