4 ms·

It can go bankrupt if people stop trusting the currency.

• orangepurple 4y ago
  The government forces its subjects to pay taxes in that same currency and enforces this policy through courts, police, and the military. That is where state run currencies get their value. You need $CURRENCY because it is required to pay your taxes. The only way it ever stops is overthrow.
  • nirimda 4y ago
    That isn't true. There's many cases where e.g. through corruption and distrust, the state's capacity to collect taxes has been seriously weakened and the currency has gone into freefall so the country begins to operate - even despite threats of harsh penalty - in alternative currencies. States regularly remain in existence (i.e. are not overthrown) even after their currencies have stopped being used for everyday transactions and as regular stores of value. It is one of many examples of governments playing catchup with the economy.
• lxgr 4y ago
  The currency can become worthless, sure, but that does not make the central bank bankrupt. The concept simply does not make sense for a (fiat) currency‘s issuer.
  • kodyo 4y ago
    When the state can no longer function because it has allowed its currency to be debased, who gives a shit if the central bank is solvent or not? It’s worse than bankrupt, it’s irrelevant.
    • lxgr 4y ago
      Sure, but arguably that‘s a bit like claiming that your house plant got a heart attack, i.e. can die – but not like that.