Conclusions: Modern Money Theory for Sovereign Currencies

Abstract

In this Primer we have explored the macro identities as well as the stock-flow implications that are necessary to formulate appropriate policy for any sovereign nation, including developing nations. We carefully examined operational realities for a nation that adopts a sovereign currency. We have also explored the constraints imposed by different currency regimes on domestic policy formation. We concluded that floating a currency expands domestic policy space. Still, even in the context of a developing nation operating with a pegged currency, the space available to the issuer of the currency (the sovereign government) is almost certainly greater than what is generally recognized.