Soft currency

Soft currency

Soft currency indicates a type of currency whose value may depreciate rapidly or that is difficult to convert into other currencies. It is generally less desirable than hard currency to users. Soft currency can be in the form of paper, electronic or debt-based "IOUs" which have in the past been used in place of hard currency.

As "bad money" generally displaces "good money" (good money being used as a store of wealth and bad money being used as a means of exchange), it is generally the case that governments, private banks and other issuers of money have replaced hard currency with soft where the opportunity to do so has been permitted by the populace. This behavior is commonly known as Gresham's law.

See also

* Fiat currency
* Private currency
* Monetary reform
* Hard currency


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