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Why is money in circulation a liability of the central bank?
We know that the money today is fiat currency—that it is money because the government says it's so. So the government does not technically "owe" anything. The only thing that is stopping it from creating new money every time need arises is the possibility of inflation. Given all of that, why is still money in circulation listed as a liability of the central bank? Am I missing something here?
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