Clarifying the Concepts of Monetary Sovereignty and Monetary Power: An Institutionalist Perspective

Heterodox economics literature tends to use monetary sovereignty in many ways while confusing it with monetary power . This institutionalist perspective builds these two concepts and defines monetary sovereignty as the ability of an entity to issue its money, while monetary power refers to the capacity to organize and influence the money by actors through the entity that issues the money. These concepts show that both public and private debt issuers own monetary sovereignty, but the state manages public, private, and external debts through monetary practices and monetary regimes. Finally, the French state’s monetary power during the building of the euro is analyzed to reveal that the French state had strong monetary power relative to Germany, allowing it to advocate for the euro. However, since 1983, that power has been subject to the will of the financial markets. JEL Classification : E42, F45, N24