Limitations to States’ Sovereignty and Dispute Settlement
Chapter 4: Exchange Restrictions and Capital Controls under the IMF Legal Framework
INTRODUCTION In 1929, in a well known pronouncement, the Permanent Court of International Justice affirmed that: ‘[it] is indeed a generally accepted principle of public international law that a State is entitled to regulate its own currency’.1 Monetary sovereignty2 entails the right for a State to issue a currency, give it legal tender, choose an exchange rate regime and regulate the use of the national currency and of foreign currencies within national borders.3 PCIJ, Case Concerning the Payment of Various Serbian Loans Issued in France, 12 July 1929, Series A, No. 20/1, p. 44 and PCIJ, Case Concerning the Payment in Gold of Brazilians Federal Loans Contracted in France, 12 July 1929, Series A, No. 21/1, p. 122. 2 The theory of States’ monetary sovereignty dates back to Jean Bodin: ‘Livre I, Chapitre 10. Des vrayes marques de souveraineté. Quant au droit de moneage, il est de la mesme nature de la loy, et n’y a que celui qui a puissance de faire la loy, qui puisse donner loy aux monnoyes [. . .] Or il n’y a rien de plus grande consequence apres la loy, que le titre, valeur, et pied de monnoyes, et en toute Republique bien ordonee, il n’y a que le Prince souverain qui ait ceste puissance’ (Bodin, Jean (1576), Les six livres de la Republique, Libro I, Chapitre 10, republished in 1986, Paris: Fayard, at 331). 3 According to Mann: ‘the municipal legislator is free to define the currency of his country, to decide whether or not it...
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