Money as a legally enforceable debt

Abstract:

Money is usually regarded as a subject in the domain of economists, but it is really a fundamentally legal notion. In fact, it is a creation of the law. Money is a special object of property, and at the same time a form of debt, enforceable by law which ultimately confers on it the quality of money. The concept of dematerialised property assists in describing the concept of money accurately.

The article discusses the different types of money, and the creation of money through central banks and through commercial banks by giving credit. It explores the possible legal foundation of this money creation process. The discussion also looks at the legal regulation of money creation in Germany and presents findings from an interview with a practising commercial lawyer in Germany which confirm the author’s thesis that money is a legally enforceable debt.