eli5 How do governments track all currency (physical and digital) in order to always know the denominator (how much total money there is)?
In: Economics
They track it at the point of creation. Since governments are the only ones allowed to issue their currencies they track physical money when it is made, and digital when it is issued. Additionally they also track how much physical currency they take in and destroy when it is damaged too severely and at a slight estimate for that damaged and thrown away by citizens not turning it in.
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