I'm not sure how it works internationally
but I was in Russia when the rouble was falling against the pound by 100-150 roubles per day and nobody could buy anything; and also in Poland when they change to the new zloty and everyone had to change their old zloty for new zloty at a 100-1 exchange rate.

I think it's primarily to ward off complete collapse as things were getting hard for the average person in both countries. If you have a new currency ready to go though, you don't have to sit through a few months of constantly spiralling currency fall before you can get your new currency in place.
(Dildo Bugger destroyed a ring on, Wed 7 Dec 2011, 15:54, 2 replies)

I remember that too.
It also happened in Brazil, in both directions. Zimbabwe as well.

What happenes is everyone (who can) starts working with US$. The rest get fucked.
(username failed moderation, Wed 7 Dec 2011, 16:16, closed)

Hmm.
I still think you'd need a fair bit of international agreement to introduce your new currency, so as to give it value on the exchange markets. If you were stockpiling a reserve currency, I'd expect your actual currency to devalue pretty sharply, and a similar fate to befall your new currency, as it'd be an admission that your economy was knackered.

Money really is bollocks, isn't it? Back to barter, I guess.
( monster munch person, man, woman... camera... TV?, Wed 7 Dec 2011, 16:23, closed)

I dont' know why
but once the decision is taken to devalue and switch it does tend to stave off the rapid decline in value that's been experienced to that point.

With me there comes a point in economics when it leaves the realm of understanding and seems to bear more relation to voodoo. At least, the comprehensibility of it shifts in that direction.
(Dildo Bugger destroyed a ring on, Wed 7 Dec 2011, 16:28, closed)

Agreed.
Economics seems to be based on the consensus of a few, rather than anything tangible.
( monster munch person, man, woman... camera... TV?, Wed 7 Dec 2011, 16:32, closed)

I think Mr Munch has hit the nail on the head in this thread
You can't simply magic a new currency out of nowhere, otherwise every indebted nation would be doing it willy nilly. If you replaced the $ with $ mk2 without addressing the underlying causes of the first currency's demise then the new denomination will simply inherit all of the economic ills of the old, which the added costs of altering the infrastructure to accept the new coins and notes.

Who pays for all the vending machines to be modified and for stockpiling the banks which have already been bailed out thrice?
(Bicycle Repairman "you're also a bit of a wanker", Thu 8 Dec 2011, 11:32, closed)

"I think Mr Munch has hit the nail on the head in this thread
You can't simply magic a new currency out of nowhere"

I'm sorry, but that's precisely what struggling economies do actually do, there's no "can't" about it. I've seen it happen twice and know it's happened more often than that.

Just because you don't understand how it works doesn't mean it doesn't work. I don't know how it works but it's been done and it works, at least in some instances.
(Dildo Bugger destroyed a ring on, Thu 8 Dec 2011, 12:19, closed)