Public Law’s Rationalization of the Legal Architecture of Money: What Might Legal Analysis of Money Become?

  • Isabel Feichtner
Part of the Beiträge zum ausländischen öffentlichen Recht und Völkerrecht book series (BEITRÄGE, volume 273)


Many of the ills afflicting democratic capitalism have their source in the current legal architecture of money and finance. At the same time the reimagination of institutions of money and finance promise an avenue for reform to democratize the economy and prevent the perpetuation of austerity politics. Such institutional reimagination requires a perspective that recognizes money as an institution linking state and civil society, politics and the economy. Economics in great part eschews such a perspective and perceives of money as a medium of exchange largely independent of government and politics. Legal analysis, by contrast, should be ideally suited for the endeavor to analyse the various ways in which the institutional design of money configures political economy.

To start paving the way for such analysis, I seek to clarify how German public law scholarship has been obstructing a reimagination of monetary design. It has adopted an understanding of money that is informed by economics and on this basis has rationalized the particular legal architecture of money in Germany and in the European Economic and Monetary Union as necessary to protect individual freedom and democratic constitutionalism. Recent practice of the European Central Bank reveals that the strict separation between monetary and economic policy, between money and public finance that characterizes the European Economic and Monetary Union, and its rationalization by legal scholarship and case law cannot be maintained. I argue that a growing body of literature on the political economy of money can inspire a legal analysis that overcomes the current fetishization of the legal architecture of money. This literature provides a starting point for imagining institutions that operationalize monetary sovereignty to serve the public interest and that decrease the hold of private creditors on democratic politics.


  1. Bank of England (2012) The distributional effects of asset purchases. Bank Engl Q Bull Q3:186Google Scholar
  2. Bank of International Settlements (2016) 86th Annual Report. 1 April 2015–31 March 2016Google Scholar
  3. Benes J, Kumhof M (2012) The Chicago plan revisited, IMF WP/12/202Google Scholar
  4. Blankart CB (2011) Öffentliche Finanzen in der Demokratie: Eine Einführung in die Finanzwissenschaft, 8th edn. Vahlen, MunichGoogle Scholar
  5. Degens P (2013) Alternative Geldkonzepte – ein Literaturbericht, MPIfG Discussion Paper 13/1Google Scholar
  6. Desan C (2014) Making money: coins, currency, and the coming of capitalism. Oxford University Press, New YorkCrossRefGoogle Scholar
  7. Desan C (2015) Decoding the design of money. Eur Financ Rev 24, Feb–Mar 2015Google Scholar
  8. Dostoyevsky F (1862) Notes from a dead house (2015, translated by Richard Pevear and Larissa Volokhonsky). Alfred A. Knopf, New YorkGoogle Scholar
  9. Draghi M (2015a) Introductory statement, hearing at the European Parliament’s economic and monetary affairs committee, 15 June 2015. Accessed 8 Feb 2018
  10. Draghi M (2015b) Speech at the ECB and its watchers XVI conference, ECB, 11 Mar 2015. Accessed 8 Feb 2018
  11. Eichengreen B (2012) European monetary integration with benefit of hindsight. J Common Mkt Stud 50:123CrossRefGoogle Scholar
  12. Eichengreen B, Frieden J (1993) The political economy of European monetary unification: an analytical introduction. Econ Pol 5:85CrossRefGoogle Scholar
  13. Friedman M (1962) Capitalism and freedom. University of Chicago Press, Chicago, ILGoogle Scholar
  14. Goldmann M (2014) Adjudicating economics? Central bank independence and the appropriate standard of judicial review. German L J 15:265Google Scholar
  15. Goodhart C (1998) The two concepts of money: implications for the analysis of optimal currency areas. Eur J Pol Econ 14:407CrossRefGoogle Scholar
  16. Goodhart C (2015) Currency school versus banking school: an ongoing confrontation. Econ Thought 4:20Google Scholar
  17. Graeber D (2011) Debt: the first 5,000 years. Melville House, New YorkGoogle Scholar
  18. Hahn HJ, Häde U (2010) Währungsrecht, 2nd edn. Beck, MunichGoogle Scholar
  19. Hayek FA (1977) Entnationalisierung des Geldes. Eine Analyse der Theorie und Praxis konkurrierender Umlaufsmittel. Mohr Siebeck, TuebingenGoogle Scholar
  20. Herrmann C (2010) Währungshoheit, Währungsverfassung und subjektive Rechte. Mohr Siebeck, TuebingenGoogle Scholar
  21. Herrmann C (2012) Die Bewältigung der Euro-Staatsschulden-Krise an den Grenzen des deutschen und europäischen Währungsverfassungsrechts. EuZW 21:805Google Scholar
  22. Huber J (2013) Monetäre Modernisierung. Zur Zukunft der Geldordnung: Vollgeld und Monetative, 3rd edn. Metropolis, MarburgGoogle Scholar
  23. Huber J (2014) Modern money theory and new currency theory: a comparative discussion, including an assessment of their relevance to monetary reform. Real-World Econ Rev 38(66):50Google Scholar
  24. Ingham G (2004) The nature of money. Polity, CambridgeGoogle Scholar
  25. Isensee J, Kirchhof P (eds) (2007) 5 Handbuch des Staatsrechts der Bundesrepublik Deutschland, 3rd edn. C.F. Müller, HeidelbergGoogle Scholar
  26. Joerges C (2014a) Brother, can you paradigm? ICON 12:769Google Scholar
  27. Joerges C (2014b) Three transformations of Europe and the search for a way out of its crisis. In: Joerges C, Glinski C (eds) The European crisis and the transformation of transnational governance: authoritarian managerialism versus democratic governance, p 25. Hart Publishing, OxfordGoogle Scholar
  28. Joerges C (2016) Pereat Iustitia, Fiat Mundus: what is left of the european economic constitution after the OMT litigation? MJ 23:99Google Scholar
  29. Kaboub F (2007) Employment guarantee programs: a survey of theories and policy experiences. Levy Economics Institute Working Paper No. 498, May 2007Google Scholar
  30. Kämmerer JA (2013) Art 123 AEUV. In: Siekmann H (ed) EWU. Kommentar zur Europäischen Währungsunion, p 150. Mohr Siebeck, TuebingenGoogle Scholar
  31. Kennedy D (2013) International legal theory: law and the political economy of the world. Leiden J Int Law 26:7CrossRefGoogle Scholar
  32. Kirchhof P (2007) Die Steuern. In: Isensee J, Kirchhof P (eds) 5 Handbuch des Staatsrechts der Bundesrepublik Deutschland, 3rd edn, p 959. C.F. Müller, HeidelbergGoogle Scholar
  33. Kloepfer M (2014) Finanzverfassungsrecht mit Haushaltsverfassungsrecht. Beck, MunichGoogle Scholar
  34. Knapp GF (1905) Staatliche Theorie des Geldes. Duncker & Humblot, LeipzigGoogle Scholar
  35. Kumhof M, Jakab Z (2016) The truth about banks. Financ Dev 53(1), Mar 2016Google Scholar
  36. Lerner AP (1943) Functional finance and the federal debt. Soc Res 10:38Google Scholar
  37. Lerner AP (1947) Money as a creature of the state. Am Econ Rev 37:312Google Scholar
  38. Marx K (1867) Das Kapital. Kritik der politischen Ökonomie, vol 1. Otto Meissners Verlag, HamburgGoogle Scholar
  39. Mayer T (2014) Die neue Ordnung des Geldes: Warum Wir eine Geldreform brauchen. FinanzBuch Verlag, MunichGoogle Scholar
  40. McLeay M, Radia A, Thomas R (2014) Money creation in the modern economy: an introduction. Bank Engl Q Bull Q1:1Google Scholar
  41. Menger C (1892) On the origin of money. Econ J 2:238 (trans: Foley CA)CrossRefGoogle Scholar
  42. Mersch Y (2015) On European unity: economic and institutional challenges facing Europe, ECB, 25 June 2015. Accessed 8 Feb 2018
  43. Mitchell W, Muysken J (2008) Full employment abandoned: shifting sands and policy failures. Edward Elgar Publishing, CheltenhamGoogle Scholar
  44. Mitchell W, Wray LR, Watts M (2016) Modern monetary theory and practice: an introductory text. CreateSpace Independent Publishing PlatformGoogle Scholar
  45. Mitchell-Innes A (1913) What is money? Banking Law J 361(5):377Google Scholar
  46. Mosler W (2010) The seven deadly innocent frauds of economic policy. Valance Co. Inc., ChristianstedGoogle Scholar
  47. Mundell RA (1961) A theory of optimum currency areas. Am Econ Rev 51:657Google Scholar
  48. Ohler C (2015) Bankenaufsicht und Geldpolitik in der Währungsunion. Beck, MunichGoogle Scholar
  49. Piketty T (2014) Capital in the twenty-first century. Harvard University Press, Cambridge, MAGoogle Scholar
  50. Plickert P (2013) Deutsche Ökonomen werfen der EZB Staatsfinanzierung vor, FAZ, 11 Sept 2013. Accessed 8 Feb 2018
  51. Ricks M (2015) The money problem: rethinking financial regulation. University of Chicago Press, Chicago, ILGoogle Scholar
  52. Roth M (2015) Beschäftigung als gelpolitisches Ziel der Europäischen Zentralbank. Soziales Recht 4:141Google Scholar
  53. Roubini N (2016) Unconventional monetary policy on stilts, Social Europe, 5 Apr 2016. Accessed 8 Feb 2018
  54. Sassen S (2014) Expulsions: brutality and complexity in the global economy. Harvard University Press, Cambridge, MACrossRefGoogle Scholar
  55. Scharpf FW (2011) Monetary union, fiscal crisis and the preemption of democracy. MPIfG Discussion Paper 11/11Google Scholar
  56. Schmidt R (2007) Geld und Währung. In: Isensee J, Kirchhof P (eds) 5 Handbuch des Staatsrechts der Bundesrepublik Deutschland, 3rd edn, p 935. C.F. Müller, HeidelbergGoogle Scholar
  57. Sigurjonsson F (2015) Monetary reform: a better monetary system for Iceland. Report commissioned by the Prime Minister of Iceland. Accessed 8 Feb 2018Google Scholar
  58. Smith A (1776) The wealth of nations. W. Strahan and T. Cadell, LondonGoogle Scholar
  59. Specht L (2015) Review of Christine Desan, making money. Coin, currency, and the coming of capitalism. ICON 13:774Google Scholar
  60. Streeck W (2011) The crises of democratic capitalism. New Left Rev 71:5 (Sept–Oct 2011)Google Scholar
  61. Streeck W (2013) Gekaufte Zeit: Die vertagte Krise des demokratischen Kapitalismus. Suhrkamp Verlag, BerlinGoogle Scholar
  62. Streeck W (2015) Why the Euro divides Europe. New Left Rev 95(5):9–10, Sept–Oct 2015Google Scholar
  63. Streeck W, Mertens D (2010) Politik im Defizit: Austerität als fiskalpolitisches Regime. Der moderne Staat 3:7Google Scholar
  64. Tabb WK (2004) Economic governance in the age of globalization. Columbia University Press, New YorkCrossRefGoogle Scholar
  65. Teubner G (2011) A constitutional moment? – The logics of ‘hit the bottom’. In: Kjaer P, Teubner G (eds) The financial crisis in constitutional perspective: the dark side of functional differentiation, pp 3–42. Hart Publishing, OxfordGoogle Scholar
  66. Transcript of the Hearing at the European Parliament’s Economic and Monetary Affairs Committee, 15 June 2015. Accessed 8 Feb 2018
  67. Trichet JC (2010) Reflections on the nature of monetary policy non-standard measures and finance theory, ECB, 18 Nov 2010. Accessed 8 Feb 2018
  68. Turner A (2015) Between debt and the devil: money, credit, and fixing global finance. Princeton University Press, Princeton, NJGoogle Scholar
  69. Unger R (1996) What should legal analysis become? Verso, LondonGoogle Scholar
  70. Unger R (1998) Democracy realized: the progressive alternative. Verso, LondonGoogle Scholar
  71. Vogel K (2004) Der Finanz – und Steuerstaat. In: Isensee J, Kirchhof P (eds) 2 Handbuch des Staatsrechts der Bundesrepublik Deutschland, 3rd edn, p 843. C.F. Müller, HeidelbergGoogle Scholar
  72. Vogl J (2015) Der Souveränitätseffekt. Diaphanes Verlag, ZürichGoogle Scholar
  73. Waldhoff C (2007) Grundzüge des Finanzrechts des Grundgesetzes. In: Isensee J, Kirchhof P (eds) 5 Handbuch des Staatsrechts der Bundesrepublik Deutschland, 3rd edn, p 813. C.F. Müller, HeidelbergGoogle Scholar
  74. Wray LR (ed) (2004) Credit and state theories of money. The contributions of A. Mitchell-Innes. Edward Elgar Publishing, CheltenhamGoogle Scholar
  75. Wray LR (2014) From the state theory of money to modern money theory: an alternative to economic orthodoxy. Levy Economics Institute Working Paper No 792, Mar 2014Google Scholar
  76. Wray LR (2015) Modern money theory: a primer on macroeconomics for sovereign monetary systems, 2nd edn. Springer, HeidelbergCrossRefGoogle Scholar
  77. Zioli C, Selmayr M (2001) The law of the European central bank. Hart Publishing, OxfordGoogle Scholar

Copyright information

© Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V., to be exercised by Max-Planck-Institut für ausländisches öffentliches Recht und Völkerrecht, Heidelberg 2018

Authors and Affiliations

  1. 1.Julius-Maximilians-Universität WürzburgWürzburgGermany

Personalised recommendations