A Theoretical Approach to Sovereign Money

Abstract

This article aims to analyze how various theories of money conceptualize sovereign money and, in turn, to explore the challenges posed by competition among sovereign currencies for the monetary autonomy of nation-states. In stylized form, theories of money can be classified into at least four approaches: metallism (of an orthodox character), chartalism, regulationist, and post-Keynesian perspectives (all heterodox in nature). These approaches offer different views on the historical origin, nature, and functions of money, as well as on how payment systems operate. Drawing on this plural theoretical framework, the article examines the role and the tensions faced by sovereign money, particularly in peripheral countries. Integrating diverse theoretical contributions is essential to understanding the limitations and possibilities that monetary sovereignty involves.