Did you ever consider that our monetary system is actually a lot like a big game of football (soccer if you’re American or futbol if you’re not, whatever, they’re both cool sports so get over it)? Let me explain.
Why do we use the money we do? Why do we chase after bank deposits? Ultimately, the primary reason why we use the money we do is because the government has determined a playing field in which you must use the deposits that they deem “money”. That money is bank deposits and that playing field is the US banking system. If you want to purchase goods and services in the USA the most convenient way to do so is by opening a bank account and becoming part of the US payments system. The US payments system is the playing field upon which the US economy is played.
So, if you want to play ball in the US economy you have to get a bank account and use bank money. Said differently, the US government determined the playing field (the US banking system), determined the ball that can be used (the US dollar) and then outsourced the creation of that ball to private banks (banks create most of our money via the loan process which creates deposits). The government still referees the game (regulates), but the banks really control how many balls get issued and how. Bear in mind, the government doesn’t provide the balls in any meaningful sense (if you’re veering off towards the idea of cash then please read this article first). The government, regulations and taxes are all a part of the equation there, but it’s mostly about the playing field and gaining access to the balls so you can try to score goals. That’s what really creates demand for US dollars. It’s having access to the playing field that is the US banking system with the hope that you might be able to use the balls to improve your situation in life.
The kicker is (no pun intended), if no one wants to play ball then the government can’t make people play ball on their field. But as long as the game is competitive and producing lots of worthwhile benefits for its users (goals or touchdowns, if you will) then there is demand for the balls and a continual desire for new entrants to join the game.
That’s an oversimplified version of the monetary system, but it might help some people better understand why we have the system we have and why we decide to interact within it. Now get out there and kick some balls!
For a much more detailed perspective please read Understanding the Modern Monetary System.