Part I The Concept of Money and Monetary Systems, 2 The Organization of the Monetary System

Subject(s):

Currency and the unit of account — Revaluation and devaluation — Sterling — International financial system — International monetary conduct — Monetary system — Money and inter-state obligations — Monetary union and monetary sovereignty

This chapter examines the organization of the monetary system, the role of domestic currencies, and the nature of the legislation required to create a monetary system. Chiefly in the course of the nineteenth century, almost all States enacted legislation with a view to organizing their respective currencies. This led to the creation of national monetary systems as they are familiar to the modern world. At an institutional level, the monetary system usually comprises a central bank or similar monetary authority which enjoys the exclusive privilege of issuing national banknotes. That institution will usually also be responsible for the creation and holding of monetary reserves, including foreign currencies and—to a diminishing extent—gold. The chapter then looks at the role of sterling within the international and domestic legal orders, convertible and inconvertible currencies, the relevance of the unit of account and legal tender legislation, the issue of the currency in the United Kingdom, and the process of revaluation and devaluation.