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<blockquote data-quote="Eldritch_Lord" data-source="post: 5766638" data-attributes="member: 52073">What happens to a nation's currency after defeat depends on what happens to the nation.&nbsp; The value of a fiat currency is based upon the strength of the nation's economy and the trust in the nation's government to back it.&nbsp; (This is a vast simplification, of course, but it's close enough.)&nbsp; So the value of the currency is really up to you to determine based upon the outcome of the war:If, when defeated, the nation essentially goes on about its daily business except they're no longer sustaining a wartime economy, there will likely be some devaluation of the currency, but if it was relatively strong beforehand the drop shouldn't be too bad.If, when defeated, the nation is occupied by the victors but they continue to use their own currency, it will likely see a rapid decline in value thanks to the government losing its tax income, the occupiers taking money to compensate for their war efforts, the users no longer being able to trust the government or the economy to work out as expected (since the occupying force can screw with those things, taking the money in the case of the government or controlling what is produced in the case of the economy), and so forth.&nbsp; Think of the East German economy after World War 2: with the Soviets in charge, inflation spiked, the economy came under their control, and things generally sucked.If, when defeated, the nation is occupied by the victors and adopt the victor's currency, the nation's own currency will either become basically worthless or merely drastically drop in value, depending on how thoroughly they're occupied.&nbsp; Think of the Confederacy after the US Civil War: Without a country to back it or spend it in, the currency is useless.Usual disclaimer, not an economist, etc.&nbsp; Hope this helps.</blockquote>

[QUOTE="Eldritch_Lord, post: 5766638, member: 52073"] What happens to a nation's currency after defeat depends on what happens to the nation. The value of a fiat currency is based upon the strength of the nation's economy and the trust in the nation's government to back it. (This is a [I]vast[/I] simplification, of course, but it's close enough.) So the value of the currency is really up to you to determine based upon the outcome of the war: If, when defeated, the nation essentially goes on about its daily business except they're no longer sustaining a wartime economy, there will likely be some devaluation of the currency, but if it was relatively strong beforehand the drop shouldn't be too bad. If, when defeated, the nation is occupied by the victors but they continue to use their own currency, it will likely see a rapid decline in value thanks to the government losing its tax income, the occupiers taking money to compensate for their war efforts, the users no longer being able to trust the government or the economy to work out as expected (since the occupying force can screw with those things, taking the money in the case of the government or controlling what is produced in the case of the economy), and so forth. Think of the East German economy after World War 2: with the Soviets in charge, inflation spiked, the economy came under their control, and things generally sucked. If, when defeated, the nation is occupied by the victors and adopt the victor's currency, the nation's own currency will either become basically worthless or merely drastically drop in value, depending on how thoroughly they're occupied. Think of the Confederacy after the US Civil War: Without a country to back it or spend it in, the currency is useless. Usual disclaimer, not an economist, etc. Hope this helps. [/QUOTE]

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