God has traits like holiness, righteousness, and justice. That's who He is. God cannot remain holy, righteous and just, if He lets sin go unpunished. His righteous character demands the death penalty for sin, else He ceases to be just.
Fortunately, God is also a gracious and merciful God. He wants to save people, but He must do it in a way that does not compromise His justice. This is why He sent Jesus Christ to die on the cross. Christ paid the death penalty our sins deserved. It "satisfied" the demands of God's righteous character against sin. It publicly demonstrated that God is a just God, and does not let sin go unpunished.
Now God is free to show us His mercy and grace, without compromising His justice. He can remain just while He forgives the sinner who believes in Jesus Christ. This is because His righteous demands against sin have been satisfied. (Romans 3)
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