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The monetary mechanism of stateless Somalia

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  • William Luther

Abstract

A peculiar monetary institution emerged during the period of interregnum in Somalia from January 1991 to August 2012. Without a functioning government to restrict the supply of notes in circulation, Somalis found it profitable to contract with foreign printers and import forgeries. The exchange value of the largest denomination Somali shillings note fell from US $0.30 in 1991 to US $0.03 in 2008. However, the purchasing power eventually stabilized at the cost of producing additional notes. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • William Luther, 2015. "The monetary mechanism of stateless Somalia," Public Choice, Springer, vol. 165(1), pages 45-58, October.
    • Handle: RePEc:kap:pubcho:v:165:y:2015:i:1:p:45-58
    DOI: 10.1007/s11127-015-0291-6
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    2. Mohamed Ibrahim Nor & Tajul Ariffin Masron, 2018. "Do the Global Oil Price Shocks Affect Somalia s Unregulated Exchange Rate Volatility?," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 154-161.
    3. Jablonski, Ryan S. & Oliver, Steven & Hastings, Justin V., 2017. "The Tortuga disease: the perverse effects of illicit foreign capital," LSE Research Online Documents on Economics 67105, London School of Economics and Political Science, LSE Library.
    4. Karlo Kauko, 2018. "Did taxes, decrees or credibility drive money? Early nineteenth century Finland from a chartalist perspective," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 66(1), pages 73-90, January.
    5. Moustapha Aman & Nikolay Nenovsky, 2022. "Monetary stability and regional currency board: towards a two-tier system to accelerate regional integration in the Horn of Africa: a policy proposal," Working Papers hal-04084421, HAL.
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    7. Daniel D. Bonneau & Joshua C. Hall & Yang Zhou, 2022. "Institutional implant and economic stagnation: a counterfactual study of Somalia," Public Choice, Springer, vol. 190(3), pages 483-503, March.
    8. Lawrence H. White, 2015. "The Market for Cryptocurrencies," Cato Journal, Cato Journal, Cato Institute, vol. 35(2), pages 383-402, Spring/Su.
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    More about this item

    Keywords

    E42; Institutions; Monetary regime; Monetary standard; Somalia; Somali shilling; Purchasing power;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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