Submitted by XSauravX t3_ztz1y9 in explainlikeimfive
brianbezn t1_j1gp7er wrote
Reply to comment by XSauravX in Eli5 Why did Canada get rid of it's all gold? by XSauravX
The very simplified logic is this:
As long as Canada allows taxes to be paid with canadian dollars, the currency will hold value. As long as the government is making so much money out of taxes, they have no incentive to fuck up their own currency for short term gains.
Not having to have reserves to cover your currency is cheaper and allows you more freedom to do stuff to save the country from recessions or to drive growth among other stuff.
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