Rethinking the EU'S 'Monetary Constitution': legal theories of money, the Euro, and transnational law

Abstract

In recent years, legal scholars have dismantled influential economic accounts of the private nature of money, demonstrating that money is better understood as a 'governance project' and a public resource that is created and regulated by the state. Legal theories of money could lend support to the ECB's recent use of 'unorthodox' monetary policy to stabilise the euro, and could further support proposals for the innovative use of monetary policy to combat inequality. However, legal writing on money to date has primarily sought to challenge neoclassical economics - a body of thought that denies the impact that distributions of credit by the state play in shaping processes of value formation in the economy. Two further dimensions of the nature of money have received less attention from legal scholars to date: first, the question of how money comes to have an economic value (an important component of 'moneyness'), and, second, how the international functions of credit money as currency in international trade and finance may limit the capacities of governments to manage money differently. In this article, I offer a revised account of the legal nature of money that is more attentive to the transnational nature of the legal regimes and institutions that enable the production of sovereign credit monies in the contemporary global political economy. My analysis complicates both the suggestion that the ECB can address inequality in the eurozone by means of unorthodox monetary policy and the widely made counter-argument that the only solution to the constitutional crisis in the European Union (EU) is the creation of a political sovereign imbued with stronger fiscal powers. I find that unless the current transnational legal arrangements that enable the production and governance of money are addressed, no states will be able to act as 'centralised and legitimate political authorities' that can control capitalist credit money in accordance with democratic imperatives.