3 ms·
It's way more than that. Currencies vary based on the entire productive capacity of a country. When people decide that Japanese cars are reliable, that Costa Ri
by CPLX 9y ago
It's way more than that. Currencies vary based on the entire productive capacity of a country. When people decide that Japanese cars are reliable, that Costa Rica's beaches are lovely, or that the Russian private banking system can't be trusted, that dramatically affects the price of currencies. Currencies are a proxy for a country's whole economy not just the public sector.
- bsaul 9y agoYou could imagine the private sector running on a different economy than the country’s one. It happens when the government has gone bankrupt ( because of war or unsustainable debt, for example). But even in that case, the money still has some value, and can’t completely disappear, even if state employees run to the bank to exchange their salary against us dollar. Their value are correlated to the trust and ability to function of a state.