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Scenario: Crazy Rich Foreigner shows up in another country and wants to buy some very expensive goods/property. They purport to have massive wealth back home in their country's currency. They are also best friends with the king back home. How is that wealth verified/audited? How can we know they aren't just having their friend add some zeros to the end of their bank balance which they can then convert to dollars with regular exchange rate and buy up all the "stuff" in the other country?

I'm new to this type of economic thinking... so I may not be asking the question correctly... happy to have any clarity!

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  • $\begingroup$ Hi! Who is doing the verification? A local bank getting a transfer from their bank back home? $\endgroup$
    – Giskard
    Commented Dec 28, 2023 at 19:32
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    $\begingroup$ You should ask this question on law.se or some accounting site wealth is not being verified by economists but by auditors/accountants/lawyers $\endgroup$
    – 1muflon1 ♦
    Commented Dec 28, 2023 at 20:12
  • $\begingroup$ @Giskard yeah I dont know.. but if the institutions "back home" are corrupt, and inflating balances, what would stop them from just buying up mass assets in the another country? or maybe it's a silly question because the USA does that all the time (if the US needs more oil it can just "print it" via the Fed) $\endgroup$
    – Nicholas Franceschina
    Commented Dec 28, 2023 at 21:21
  • $\begingroup$ So your question is "why do banks trust one another, what is keeping one from gaming credit, how does banking work?" $\endgroup$
    – Giskard
    Commented Dec 29, 2023 at 7:17
  • $\begingroup$ Does this answer your question? Banks are allowed to print money out of thin air. Black magic or what? $\endgroup$
    – Giskard
    Commented Dec 29, 2023 at 7:20

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