Legal Analysis of the Dimensions of State Liability Regarding Inflation and the Protection of National Currency Value

Abstract

The value of money is constantly declining, and the expansion of liquidity in society has led to a decrease in purchasing power, which—due to inflation—erodes the real value of money. Consequently, if a person keeps their money for a long time without using it, they will only preserve its nominal form, while it will be economically depleted of value. In recent years, as most loans and long-term transactions between natural and legal persons, such as banks, are conducted in the national currency, and as the economy has experienced high inflation, creditors have suffered losses from the depreciation of debts due to delayed payments. The central issue under serious debate here is the liability of the state to compensate for losses resulting from the devaluation of money. At times, the state, by adopting certain economic or political policies, causes the devaluation of the currency and, consequently, inflation—thereby inflicting financial losses and diminishing purchasing power among various social groups. The liability of those who directly or indirectly cause the devaluation of money and inflation has been a subject of doubt and disagreement among jurists and legal scholars. Today, however, the state’s liability for compensating losses resulting from the devaluation of money is conditionally recognized.