Money, Markets, and Sovereignty

In This Review

Money, Markets, and Sovereignty
By Benn Steil and Manuel Hinds
Yale University Press, 2009
304 pp. $29.95

Steil and Hinds argue that many laws have arisen out of centuries of commercial practice. The idea that laws are under the effective control of legislatures, as well as the related concept of national sovereignty, is a relatively modern notion. In this light, national currencies endowed by rulers with legal status are historically anomalous. Money -- much of the book covers the history of money -- has traditionally taken the form of a durable and convenient physical product, such as silver, gold, or cowrie shells. Today's nationally managed currencies stand in sharp contrast to the globalization of trade and investment. The authors argue that there are far too many currencies and that the world needs an internationally accepted currency. (As its minister of finance, Hinds encouraged El Salvador to give up its currency for the U.S. dollar.) The U.S. dollar plays this role in practice, but its dominance is at risk because U.S. monetary policy, which ultimately determines the value of the dollar, is governed entirely by domestic considerations. Neither the euro nor gold (which the authors extol) is suitable for an official global role. The authors suggest that the U.S. Federal Reserve's statute should be amended to officially acknowledge the global role of the dollar and the importance of maintaining the rest of the world's confidence in it.