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2 Money, Government, and Sovereignty

From: The Legal Concept of Money

Simon Gleeson

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2022. All Rights Reserved.date: 09 December 2022

Currency and the unit of account — Monetary union and monetary sovereignty — Theories of money

This chapter shows that there exists a vast literature across different branches of the social sciences discussing the linkage between money and sovereign authority—the best account being Charles Goodhart’s paper on The Two Concepts of Money. According to Goodhart, there are two predominant theories of origin and use of money: the theories of the Cartalists, who argue that the use of currency is based on the power of the issuing authority, which effectively orders its subjects to use its tokens as money; and those theories which argue that the origin of currency lies in the market. This latter group can be sub-divided into those who argue that the basis of the value of money is the intrinsic value of the coins used (Metallists), and those who argue that money originated as a private sector, market oriented response to overcome the transaction costs inherent in barter (Mengerians).

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