[nmridul]

Maybe transaction wise paper money is still a small percentage.

But my understanding (correct me if wrong) is that the total money running in the country at any momemnt is never more than what is printed.

With digital money the central bank can issue it without the cost to print. As per (1) it costs around Rs 10 to Rs 17 to print Rs 100 note and have to be reprinted once they get damaged.

(1) https://www.hindustantimes.com/business/will-digital-currenc...

[PeterisP]

This is not true, the total money in circulation is far more than what is printed.

For example, USA has ~$2T of physical cash printed (https://www.uscurrency.gov/life-cycle/data/circulation) ; the M1 money supply (effective cash in circulation, including account balances, etc) is ~$20T - https://tradingeconomics.com/united-states/money-supply-m1 .

[pbronez]

I'm sorry to say that you are incorrect. There is not a specific number of itemized money units that define a fixed money supply. In fact, not even stock certificates work that way!

It's all elastic, and central banks have sophisticated mechanisms to tighten or loosen that elastic band. The entire financial industry exists to think of novel ways to create leverage, stitching together assets and promises into towering edifices of economic power... all founded on the idea/hope/prayer that nobody will call in all the bets at once.

Honestly, you might not want to look behind the curtain on this one. It's one of those existential risks you can't effect as a single human. It's a collective suspension of disbelief that allows the modern world to function. If/when the correction happens... it will not be fun to live through.

If you're a glutton for punishment, here's some reading:

"Chapter 2 studies leverage in the nonfinancial private sector before and during the COVID-19 crisis, pointing out that policymakers face a trade-off between boosting growth in the short term by facilitating an easing of financial conditions and containing future downside risks. This trade-off may be amplified by the existing high and rapidly building leverage, increasing downside risks to future growth. " https://www.imf.org/en/Publications/GFSR

https://research.macrosynergy.com/the-global-leverage-proble...

https://www.imf.org/en/Blogs/Articles/2021/03/29/confronting...

https://en.wikipedia.org/wiki/Fractional-reserve_banking

https://en.wikipedia.org/wiki/Money_multiplier

https://www.investopedia.com/terms/l/leverageratio.asp

https://www.investopedia.com/terms/r/rehypothecation.asp