From Territorial to Monetary Sovereignty – Webinar with Prof. Pistor

The Finance, Law, and Economics Working Group is happy to have Prof. Pistor back! In this session, we will discuss a recent paper entitled "From Territorial to Monetary Sovereignty". The full paper can be downloaded here:

State sovereignty is closely intertwined with, but not limited to, control over territory and people. It has long been recognized that control over monetary affairs is a critical part of genuine sovereignty. In this Article, the author goes a step further and argues that the relevance and importance of territorial versus monetary sovereignty has shifted in favor of the latter. This shift goes hand in hand with the rise of credit-based financial systems. Such systems depend, in the last instance, on backstopping by an entity with control over its own money supply and no binding survival constraints. Only states with monetary sovereignty fit this pattern. All others are de facto more like private entities, which by definition cannot manipulate their own survival constraint. States can surrender their monetary sovereignty directly by adopting another currency or by issuing their own debt in foreign currency and under foreign law. They also compromise their sovereignty by permitting unlimited capital inflows denominated in currencies other than their own. This is because in times of crisis they will not be able to rescue the domestic financial system from its tendency to self-destruct without subjecting itself to a sovereign debt crisis and the implied need to rely on a lifeline from other states or supranational entities.

Katharina Pistor is the Edwin B. Parker Professor of Comparative Law at Columbia Law School and Director of the Law School’s Center on Global Legal Transformation. She obtained her law degree from Freiburg University in 1988 and qualified for legal practice in 1992 after clerking for the Hamburg Court of Appeals. She obtained a Masters in Law from the University of London in 1989; a Masters in Public Administration from the Kennedy School of Government in 1994; and a Doctorate in Law from the University of Munich in 1998.

Her research and teaching spans corporate law, corporate governance, money and finance, property rights, and comparative law and legal institutions. She has published widely including in the Journal of Comparative Economics and the American Law and Economics Review, and with Chicago and Columbia University Presses. In 2012 she was co-recipient (with Martin Hellwig) of the Max Planck Research Award on International Financial Regulation; in 2014 she received the Allen & Overy Prize for the best working paper on law of the European Corporation Governance Institute; and in 2015 she was elected member of the Berlin-Brandenburg Academy of Sciences. She is also the recipient of research grants by the Institute for New Economic Thinking and the National Science Foundation.

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