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TNT245 asked in Social ScienceEconomics · 1 decade ago

How can fake currency destabalize our economy?

3 Answers

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  • Anonymous
    1 decade ago
    Favorite Answer

    Currency of any country is a liability of its Reserve Bank. All Currency in circulation is backed by assets of the Issuing Reserve Bank.

    A Fake currency only increases the liability of the Reserve Bank without any real assets backing the same. Not only this, the fake currency also increases Inflation in the economy to the extent and time it is in circulation.

  • Eddy T
    Lv 7
    1 decade ago

    By making people unsafe to hold and use money.Making the financial crisis worst and destabilise the economy.

  • Cowboy
    Lv 6
    1 decade ago

    Will you sell your house to me for a couple of colored papers (that have no value) that does not account to anything.

    If you do, economically, too, you are poorer and I am richer by that much.

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