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 do not do that, atleast for physisical currency.
What is tracked for physical currency is the amount produced by the government and the amount of old damage bills take out of circulation that get destroyed. The diffrence is the amount of physical currency out there. Some of it will have been destroyed in some other way or just lost, that will be a small amount compared to what is in circulation or intentional stored by someone.
For digital currectny I would assume that the regulation that exist for financial institution that can handle it require them to give enough information to the goverment.
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