home Some people say that governments should not have a monopoly on money. If there were multiple competing currencies, then the for-profit companied which each currency would manage the supply and value of that currency, and there would be no need for the central bank to manage the money supply. For every transaction, both parties must agree on which currency to use. But what if one of the parties is the central government? If the central governments insists on one specific currency, then that currency has an unfair advantage. But if the government allows people to use any currency they want, then people will chose to pay their taxes in a worthless currency. It might be helpful if the central government defined a standard reference money, to be used for measuring the values of other currencies, like the central government defines standard units of length and weight. The central government might need to manage the reference money in order to maintain a stable value. Or maybe a price index could be used as reference money.

Money is the unit of value. see what is money. The value of everything other than money is measured with money. But if there is more than one kind of money, then we need a reference money to measure the value of money.