The Legalization of International Monetary Affairs

Sovereign control over money is one of the most closely guarded national prerogatives. 1 Creating, valuating, and controlling the distribution of national legal tender is viewed as an inherent right of a nation-state in the modern period.Yet over the course of the twentieth century, international rules of good monetary conduct have become “legalized” in the sense developed in this volume. This historic shift took place after World War II in an effort to bolster the confidence that had been shattered by the interwar monetary experience.2 If the interwar years taught monetary policymakers anything, it was that economic prosperity required credible exchange-rate commitments, open markets, and nondiscriminatory economic arrangements. International legalization of monetary affairs was a way to inspire private actors to once again trade and invest across national borders.Governmen