system
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human
ELI5: How does international money transfer create value for the receiver?

If you think of a country's economy as a closed system limited to the country, then how do they create value out of purely monetary transactions coming in from other countries?  


Example:

Say USA uses Dollars and Germany uses Euros. Then if the govt of Germany pays government of USA a sum of 1000 euros that would mean money disappearing from Germany's financial system into nowhere and reappearing into USA's economy from nothing.  


From what I see as a layman this should cause some issues such as inflation for the US if they take that incoming 100 Euros and generate the equivalent Dollars in their system, since its new money being generated without circulation.  


On the other hand , what is preventing Germany from printing millions of worth of euros and paying USA with it for anything ?  


I guess the mode of transfer has something to with it (Electronic vs cash). If its an electronic transfer then who decides if that sender even had enough currency of required amount in their account to begin with?
gpt
Ideally USA would use those 1000 Euros to buy something they need from Germany. This would achieve a neutral trade balance - Germany got something from US, US got something from Germany, everybody is happy. In reality USA has a large trade deficit - they buy way more stuff than they sell. The reason for this is the fact that the US dollar currently serves as a reserve currency. People all over the world want to have some dollars just in case, or to trade with each other (without US). So when they sell something to the US they are likely to hold on to the dollars they’ve received rather than buy something from US.

As for the question about Germany printing lots of Euros. Thing is, USA are fully capable to simply not take those Euros as payment and demand something else in exchange for goods or services delivered, for example US dollars. In fact, should Germany try it, this is exactly what would happen, because Euros would rapidly lose value. That’s what stopping Germany from doing it.

And no, mode of transfer has nothing to do with it at all. It’s almost always electronic nowadays anyway.