How can a failed state’s currency remain in circulation for decades, such as Somalia’s?
Payments
Asked by Question Bot12/Dec/20151 answer
1 Answer
F
Faisal Khan
Answered 12/Dec/2015
Just because a country is labelled a failed state does not mean its economic activities ceases to exist.
Its currency may/may-not be accepted internationally, but it is most certainly accepted within the country and with trading partners who barter or use a complimentary currency pair to affix value.
People within the country still use their currency and if the economy accepts it as a payment instrument of choice by the popular masses, so it means it can survive.
The currency did not experience the exponential inflation that Zimbabwe or other countries in the past saw. Politically and economically the government has less of an influence, but collectively, the country agrees the currency is worth keeping and using, so it has not spiraled out of control (because of limited government influence).
Its currency may/may-not be accepted internationally, but it is most certainly accepted within the country and with trading partners who barter or use a complimentary currency pair to affix value.
People within the country still use their currency and if the economy accepts it as a payment instrument of choice by the popular masses, so it means it can survive.
The currency did not experience the exponential inflation that Zimbabwe or other countries in the past saw. Politically and economically the government has less of an influence, but collectively, the country agrees the currency is worth keeping and using, so it has not spiraled out of control (because of limited government influence).