Or they believe that something will happen if they don’t have it. If I impose a tax on you in Simolians, and I have the power to enforce it by confiscating all

Or they believe that something will happen if they don’t have it. If I impose a tax on you in Simolians, and I have the power to enforce it by confiscating all your assets and your liberty then you will obtain whatever amount of Simolians I demand as that is almost certainly the cheaper alternative. Then the exchange value of the currency is down to what you have to do for me to get me to issue Simolians.