how is the value of banknotes guaranteed?
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It’s guaranteed by each government, which ultimately holds power over the entire country including its industry.
So in a roundabout way, the value of a currency is guaranteed by the value of everything the economy produces or provides.
That’s why the US Dollar has always been internationally valued as a rather stable currency: The US economy is one of the strongest economies in the world and it’s extremely unlikely to collapse entirely. So in turn the US Dollar is extremely unlikely to collapse entirely.
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