Cryptocurrency Q&A
What backs the U.S. dollar?
What backs the U.S. dollar?
CryptoWizardry
Wed Sep 18 2024
|
7 answers
1414
I'm curious to understand what backs the value of the U.S. dollar. As the world's reserve currency, it's a widely used and trusted form of payment. But what exactly gives it its strength and stability? Is it backed by gold, like it was in the past, or is there something else at play? And in today's digital age, with the rise of cryptocurrencies, how does the U.S. dollar maintain its status as the global standard for currency?
7 answers
CherryBlossomPetal
Thu Sep 19 2024
The majority of money in an economy is created through the process of fractional reserve banking, which is conducted by commercial banks.
Was this helpful?
70
35
IncheonBeauty
Thu Sep 19 2024
Commercial banks generate money by lending out more than they have in deposits, a practice known as fractional reserve banking.
Was this helpful?
234
55
Margherita
Thu Sep 19 2024
The concept of money supply is complex and multifaceted. At its core, it refers to the total amount of money available in an economy.
Was this helpful?
226
22
JejuJoyful
Thu Sep 19 2024
One aspect of money supply is the physical currency in circulation, which is primarily backed by government debt.
Was this helpful?
376
67
EchoChaser
Thu Sep 19 2024
This process allows for the expansion of the money supply beyond the physical currency in circulation, as loans create new deposits that can then be lent out again.
Was this helpful?
180
25
Load 5 more related questions
