That's a distributed database with more ceremony. I'm sure there are use cases I'm not aware of yet with novel technologies, but governments are not going to allow their monetary policy to be usurped by distributed writer Merkle trees run by randos.
Trustlessness is, no doubt, a "hard" problem solved by crypto. But, just because something is theoretically trivial doesn't mean that it is in practice. Could you architect a "distributed database with more ceremony?" Sure. Will they? Maybe not.
I realize this is offensive to fans of bitcoin/crypto's technical achievement and monetary ideals, but that doesn't mean it's not operative.
You don't need a PC to run a word processor. That said, if you wanted to build a dedicated word processor, you would probably use or modify a pre existing PC architecture.
Yes. If they use cryptography to ensure that the database is obfuscated, they could even make the database public with no consequence and anyone could verify the current money supply. That seems like an advantage over the current system where we trust them to report the correct amount?
But you have to trust the central bank in order for the money to mean anything at all (unless you're proposing that the central bank would become unable to change the money supply, which is a much more drastic change to the status quo than is being proposed).
If I am the Central Bank of Hyrule and I point out to you three million rupees and you see them, you're confident in today's money supply, have no idea whether I'm about to mint another hundred million tomorrow. Your trust (or lack of trust) that I won't do so directly influences the value of rupees, that is, the exchange rate between rupees and other currencies (USD, ETH, whatever) or the purchasing power of rupees. If I do mint piles of rupees, the value of the rupee will crash, and it doesn't matter that you saw three million yesterday - they're not worth as much as they were.
If you know that I am unable to mint more rupees, then I'm not acting as a traditional central bank, I've just created an actual cryptocurrency like Bitcoin or something with a fixed supply.
If everyone has collectively lost trust in their government to the extent that they no longer believe their government will not hyper-inflate their currency on a whim, the average individual under that government will have much bigger problems like "how do I survive all these bullets while my nation-state enters anarchy". We haven't switched to exchanging gold for groceries even before cryptocurrencies entered the picture, so I don't see why we would now.
Sure. I'm just not totally sure there's a meaningful point at which you trust that your government won't hyper-inflate your currency but you don't trust that the existing monetary supply is real, i.e., I don't think that it helps anything to have cryptographic proof of the government's existing monetary supply.