Sovereign debt restructuring shares many similarities with a currency reform. Both are general regulatory measures designed for a specific macroeconomic purpose. In the case of currency reform, the goal is typically to bring inflation under control, or, more generally, to establish a sound unit of account that allows for the trade in goods and services at an appropriate exchange rate. In the case of sovereign debt restructuring, the goal is to return debt to sustainable levels (and, often incidentally, reduce inflation too).

It is a long-established principle of international law that states are entitled to regulate their own currency. In Emperor of Austria v Day and Kossuth (1861), the English Court of Appeal in Chancery found that the Emperor of Austria had, as the King of Hungary, the sole and exclusive right of issuing and regulating currency in Hungary, including the right to regulate the currency and to determine its value in relation to other currencies. In the history of sovereign defaults, a number of disputes have involved changes to the unity of account in which sovereign debt is payable. How courts and tribunals have resolved such disputes is the subject of this chapter.

In Juillard v Greenman (1884), the US Supreme Court also affirmed a broad principle of monetary sovereignty. In Norman v Baltimore & Ohio Railroad (1935), the most important gold clause case in the United States following the Great Depression, the court explained that debts suffered from a ‘congenital infirmity’ and that they might be changed by the competent legislator.