9 - Denationalizing Money?: Economic Liberalism and the “National Question” in Currency Affairs

Summary

We live in an age when the ideology of economic liberalism is embraced by a growing number of governments in all parts of the world. Not since the early years of the twentieth century has this ideology dominated the global economic order to such an extent. One of the most important thinkers behind the “neo-liberal” economic revolution of recent years was Friedrich Hayek. Among the more interesting of Hayek's ideas was his advocacy in 1976 of a world monetary system no longer centered around exclusive government-issued national currencies. In its limited form, this proposal would allow the co-circulation of foreign currencies alongside domestic currencies in each country's territory. In its more radical form, Hayek's reforms would do away with central banks and encourage private issuers of money to challenge the government's monopoly over currency. Hayek's advocacy of the “denationalization of money” - in both its limited and more radical approach - has attracted considerable attention in academic circles. Among policymakers, his proposal to allow co-circulation of currencies has also generated substantial interest, especially among those concerned with countries in the South and ex-Eastern bloc where “currency substitution” is widespread.