How would I make my fictional country's currency viable? I've come up with an idea, but I'll appreciate comments and ideas. (ty)

a month ago by DMCMNFIBFFF to c/worldbuilding

The country is small.

It's between 1000 sq km to 50 000 sq km in size.

It's has between 100 000 and 1 million people.

Its GDP is over US$10 billion (2026).

FWIW, it's multicultural with several official languages (most are officially secondary).

It got its independence between WWI and WWII.

There might have been a "Great Leader" in the past who lead at most a semi-authoritarian government (but little, if any, blood was spilled), but for the past few decades it's been a liberal democracy, though a little socially conservative (e.g. LGBTQ are legal, but can be discriminated against in the private sector; medicinal marijuana is allowed; prostitution is allowed in certain areas; feminism exist, but in the same way it exist in, say, Utah, Texas, Alabama, or (the State of) Mississippi).

rules, if you will:

The currency was and is completely fiat—never backed by anything, such as gold or silver.
Since the country's creation it hasn't excessively inflated the currency.
There have been series of currency bills/notes, and I suppose some coins too, that have been de-monetized, though mostly to deal with counterfeiters in the early days.
The currency is (I think the term is "free floating"). There is an official government exchange rate in the banks, but you can now, as you could for most, or perhaps all, of the country's history, buy it at free market prices even in the country.
As the UK pound (£1), euro (€1), and now the Swiss franc (1 CHF) are each worth more than the USD (in 1971 it was US$1 ≈ 4 CHF, in the 1980s, US$1 ≈ 3 CHF, now it's almost US$1 ≈ 0.8 CHF) so has, in the past few years, this country's currency base unit become greater than US$1.

Thank you.

beliquititious 3 points a month ago

Viable for what? The currency you described already sounds real enough. The country's GDP sounds a bit low for the local currency to exceed the euro, but that really depends on how well the government controls inflation.

If the world you're working on is for a story or a game, you've already specced out more details than you need for the narrative. Unless the history and performance of the currency is a significant plot point.

If you want to make it more believable maybe look at the country's history. If it gained it's independence in the 1920's how did they shift from the currency the country they used to be a part of used to thier own curreny and why? What makes the value of the currency greater than the euro with such a small GDP?

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DMCMNFIBFFF 4 points a month ago

The country’s GDP sounds a bit low for the local currency to exceed the euro, but that really depends on how well the government controls inflation.

IIUC, these days, the £1 > €1 > 1 CHF > US$1.

Thus I made it 1 CHF > [this country's currency base unit] > US$1.

(wp:Euro#Exchange rates)

If the world you’re working on is for a story or a game, you’ve already specced out more details than you need for the narrative. Unless the history and performance of the currency is a significant plot point.

Thanks. 🙂

If you want to make it more believable maybe look at the country’s history. If it gained it’s independence in the 1920’s how did they shift from the currency the country they used to be a part of used to their own currency and why?

I'm thinking of making it gradual. At first when they taxed, it was in the currency of the country they were part of and/or major ones, but some of their pay—e.g. payment for government employees, soldiers, police, and politicians—was in the new currency—a small percentage at first, but it increased, as well as payments to the government increasingly was in the new currency.

Perhaps in the 1930s, most of the payments were in other currencies; some year in the 1960s or 1970s, it became about equal; and by the 1990s, all official payments were in the new currency, with this continuing.

With anti-counterfeiting measures improving, whether they have their own mint or engravers, or foreign ones, they made/make use of commemoratives (not going too crazy though) and large bills. Despite international pressure, they still have the equivalent of a $1000 bill.

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MantisToboggon 2 points a month ago

Duh, trade it for handjobs.

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DMCMNFIBFFF 2 points a month ago

as one can with many other currencies.

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HobbitFoot 1 point a month ago

It is likely that your country's currency has a soft peg where the National Bank commits to trade within a window. It likely also restricts currency export since the bank is trying to keep the currency stable and exposing it to foreign investors can likely cause some form of shenanigans.

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rain_enjoyer 1 point a month ago

Your country sounds a bit like Brunei. They have their currency tied to Singaporean dollar, which has much larger economy.

That said, assuming you mean "how to keep my currency exchange rate from imploding", you need to force somebody to pay the state something in that currency. Most commonly that's taxes, but if there's some important export you can put a requirement that payments need to be done in your currency. Most of the time international currencies are fine for that because you can exchange them and prop up your currency this way

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DMCMNFIBFFF 1 point a month ago

Your country sounds a bit like Brunei. They have their currency tied to Singaporean dollar, which has much larger economy.

I did a quick check.

wp:Brunei dollar

(my bold)

Under the Currency Interchangeability Agreement in 1967, the Brunei dollar is interchangeable with the Singapore dollar at par. As such, the Brunei dollar is accepted in Singapore as "customary tender"; likewise, the Singapore dollar is accepted in Brunei.[4]

"customary tender"—I like—I might put that expression in my story. Thanks. 🙂

It seems Brunei has had a number of currencies in the past 100 or so years:

wp:Malaya and British Borneo dollar

1953 to 1967

wp:Malayan dollar

1939 to 1953

wp:Straits dollar

1898 to 1939

In 1931, the sterling was taken off the gold standard, putting the Straits dollar on a sterling-exchange standard.[2]

That said, assuming you mean “how to keep my currency exchange rate from imploding”, you need to force somebody to pay the state something in that currency.

Again, I'm thinking of making it legal tender gradually.

For example, when a resident (citizen or otherwise) might have in, say 1938, paid wt:thons taxes, thon had to pay ≥60% of it in other foreign hard currencies, but thons sibling who worked for the government, might have been paid ≤50% in foreign currencies, and ≥50% in the country's currency. In, say, 1958, it might have been ≥40% of it in other foreign hard currencies, but thons sibling, might have been paid ≤30% in foreign currencies, and ≥70% in the country's currency. In, say, 1988, it might have been the government worker, now retired, gets 100% of thons pension in the country's currency, and in 1998, all taxes were paid in the country's currency, up to the present time.

Most commonly that’s taxes, but if there’s some important export you can put a requirement that payments need to be done in your currency. Most of the time international currencies are fine for that because you can exchange them and prop up your currency this way

Which I suppose such is because Brunei allows people to bring in any amount of Brunei dollars that they traded for outside the country, or perhaps traded inside the country, unlike the former USSR which IIUC, was illegal, or essentially illegal, to bring in Soviet rubles, but rather one had to exchange them officially at official rates.

The thing about my fictitious country, they aren't a petrol-state or are similarly rich in resources, or at least a particular one, nor did they trade much. It's a bit mountainous—hilly at least—and essentially landlocked with no major port. Pretty well anything they could sell could be bought more cheaply elsewhere.

Currently I have it starting the 20th century as mostly agrarian (and perhaps mostly subsistence), pastoral, and some limited extraction. Attempts were made at industrialization mid-century, with mixed results. The last 30 years it was the tertiary sector that grew and did much to make it a prosperous country (e.g. areas of legalized gambling and prostitution; penalties for illegal drug use not much more severe than Western countries at the time; and a bit of a tax haven (presumably smaller countries are easier to manage economically than larger ones)).

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