Query regarding international transaction between governments
$USD, electronic or otherwise, are not created/destroyed during international transactions. If India wants to buy an F-16s, at cost $34M USD, they'll have to actually acquire $34M USD, or else convince the seller to agree to a different currency. They would acquire that $34M USD in a few possible ways. One of which is to exchange INR (India Rupees) at whatever the current exchange rate is, to whomever will agree to the opposite - i.e., someone who has USD and wants INR, or at least is willing to be the middleman. Another would be to sell some goods or services in the US (for USD), or to someone else for USD.  Indian companies undoubtedly do this all the time. Think of all of those H1B workers that are in the news right now; they're all earning USD and then converting those to INRs.  So the Indian government can just buy their USD for INR, directly or more likely indirectly (through a currency exchange market). A third method would be to use some of their currency stores. Most countries have significant reserves of various foreign currencies on hand, for two reasons: one to simplify transactions like this one, and also to stabilize the value of their own currency. A less stable currency can be stabilized simply by the central bank of that country owning USD, EUR, Pounds Sterling, or similar stable-value currencies. The process for an individual would be essentially the same, though the third method would be less likely available (most individuals don't have millions in cash on hand from different currencies - although certainly some would).  No government gets involved (except for taxes or whatnot), it's just a matter of buying USD in exchange for INRs or for goods or services. Buyer A didn't send money to the US government, Buyer A sent money to Seller B, a US resident.  I think the most common way to facilitate a transaction like this is a regular old international wire transfer. Buyer A in India goes to their bank to exchange X INR to $1mm USD.  $1mm USD is then wire transferred to Seller B's bank account.  The USD was sold to Buyer A, either by funds held by Buyer A's bank, or foreign exchange markets, or possibly the US government.     Seller B may owe taxes on the gain derived from the sale of this thing to Buyer A, but that taxation would arise regardless of who the buyer was.  Buyer A may owe an import tax in India upon importing whatever they bought.  I don't think it's common to tax imported money in this sort of transactional setting though. For the US government, they've just credited Person B with a Million USD and haven't gained anything (afterall, those digits are intangible and don't really have a value, IMO). Two flaws in this reasoning: The US government didn't do anything. The receiving bank credited the recipient. If the digits are intangible, such that they haven't gained anything, they haven't lost anything either. In practice, the role of governments in the transfer is purely supervisory. The sending bank debits the sender's account and the receiving bank credits the recipient's account. Every intermediary makes some money on this transaction because the cost to the sender exceeds the credit to the recipient. The sending bank typically receives a credit to their account at a correspondent bank. The receiving bank typically receives a debit from their account at a correspondent bank. If a bank sends lots of money, eventually its account at its correspondent will run dry. If a bank receives lots of money, eventually its account at its correspondent will have too much money. This is resolved with domestic payments, sometimes handled by governmental or quasi-governmental agencies. In the US, banks have an account with the federal reserve and adjust balances there. The international component is handled by the correspondent bank(s). They also internally will credit and debit. If they get an imbalance between two currencies they can't easily correct, they will have to sell one currency to buy the other. Fortunately, worldwide currency exchange is extremely efficient.
"After the passage of the Emergency Economic Stabilization Act of 2008 and the implementation of the Troubled Asset Relief Program, the creation of an entirely new Office of Financial Stability in the treasury, the Term Asset-Backed Securities Loan Facility, the Public-Private Investment Program and the Legacy Loans and Legacy Securities Program, the Supervisory Capital Assessment Program, and the Housing and Economic Recovery Act of 2008,  I find it remarkable that anyone can seriously think that the US government is not signalling, if not actually doing, *everything* it can short of nationalization to not allow a systemically important bank to collapse.  This is to say nothing about the coining of an entirely new institution, the ""Too Big To Fail"" bank or ""Systemically Important Financial Institution"" (SIFI).  BTW and FYI, [here](http://www.scribd.com/doc/10940608/0116TARP) is the CBO:  &gt;This is the first of CBO’s statutory reports on the TARP’s transactions. Through December 31, 2008, those transactions totaled $247 billion. [...][The] CBO estimates that the **subsidy cost** of those transactions (broadly speaking, the difference between what the Treasury paid for the investments or lent to the firms and the market value of those transactions) amounts to **$64 billion**." "Sigh. You need to educate yourself regarding the recent financial crisis before claiming the government had to bail out JP Morgan.   The reason I said you don't know the difference between a depository bank and an investment bank is because JP Morgan isn't even the institution that ""gambled"" nor was it the institution that needed a bail out. It's one of the institutions that bought the toxic assets, thereby assuming the risk and mitigating what would've been a global catastrophe.  Furthermore, you seemingly don't understand the concept of a bail out considering you think the TARP cost the tax payers money which is also false.  The reason I was condescending towards you is because you insulted the CEO of a bank that had nothing to do with the housing crisis, and in fact kept us from what would've resulted in an economic depression at a minimum. ""Fuck you"" to the guy who was partly responsible for keeping our economy afloat and has every right to be frustrated at this point in time is so moronic that I don't even know where to begin." In the US bank or credit union checking, savings, CD's are insured through FDIC or NCUA. The coverage is for $250,000. This limit can be increased by having multiple accounts. You, your spouse, and a Joint account with your spouse, are considered 3 different accounts, so you could have $750K coverage.  IRA funds are considered a separate pot of money for insurance coverage. Here is an explanation from NCUA and FDIC. There is no safety difference between savings and checking. There are differences regarding minimum balances, maximum number of transactions per month, and fees. But they are equally safe. Well, to put things simply, the government debt level has to do with the money spent by government vs the revenue the government collects. The only tenuous connection between the stock market price and the capital gains tax collected at the end of the year. Granted there should be an increase in the CGT, it would be on the actual transactions made that incurred in Capital Gains. That is, at best, a drop in the bucket. Which Trump, by the way, wants to reduce. Since over a year, 100% of the shares are not exchanged, this would not be even remotely close to the increase in stock market value.   The Government simply us no ownership over the stock market value. The stock market also does not count into GDP, so you couldn’t use that to say your debt to GDP ratio declined.   They are just so unrelated that it’s senseless to link them. "Then can you elaborate on what you meant by ""at the end of the day, fiat currencies are based on trust and accountability of the government""?  I would normally *agree* with that statement, but your use of it as a point of concern in your previous post appears to contradict what you just said." Have them contact their embassy for help. They may be able to facilitate the transaction. This answer assumes that this isn't a scam, and that the 'friend' is really in trouble. Transfer of Millions of USD in and out is not possible for Individuals. There are limits on how much money an individual Indian Ordinary Citizen can send or receive. If an corporate wants to send money, depending on the services offered, they would have to initiate a SWIFT transaction. It typically takes 2-3 days for settlement of International wire. Yes it would be colluding. Most countries have well defined laws to prevent companies including banks from indulging in such activities.