n saying that government is the sole issuer of its money, both government and money are being referred to in specific ways.
Government, in the present context, refers to the consolidated government sector, which includes the fiscal and monetary authorities. In the US, for instance, the federal government includes the President and Congress at the top of the hierarchy. Congress authorizes taxing and spending measures. Below this level are the Treasury and Federal Reserve (central banking system). These serve, respectively, as the fiscal and monetary agents of Congress.
When the government spends or lends, the monetary authority issues new money. The money issued is of two particular kinds, referred to as currency and reserves.
Currency includes notes and coins. It is the physical money we carry around with us and sometimes use for making purchases. (The term currency is also used to refer more broadly to a particular unit of account, such as the dollar, the yen, the pound and so on. The intended usage is normally made clear by the context.) If the government sends somebody a check, the recipient might take the money to a bank to cash it in. The bank will need currency on hand notes and coins to satisfy the customer. Since the only legitimate issuer of currency is the government, the banking system ultimately must obtain it from that source.Government, in the present context, refers to the consolidated government sector, which includes the fiscal and monetary authorities. In the US, for instance, the federal government includes the President and Congress at the top of the hierarchy. Congress authorizes taxing and spending measures. Below this level are the Treasury and Federal Reserve (central banking system). These serve, respectively, as the fiscal and monetary agents of Congress.
When the government spends or lends, the monetary authority issues new money. The money issued is of two particular kinds, referred to as currency and reserves.
Currency includes notes and coins. It is the physical money we carry around with us and sometimes use for making purchases. (The term currency is also used to refer more broadly to a particular unit of account, such as the dollar, the yen, the pound and so on. The intended usage is normally made clear by the context.) If the government sends somebody a check, the recipient might take the money to a bank to cash it in. The bank will need currency on hand notes and coins to satisfy the customer. Since the only legitimate issuer of currency is the government, the banking system ultimately must obtain it from that source.