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 presently are used by First World economies 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.

A country's currency which is not acceptable in exchange for currency of other countries, due to unrealistic exchange rates.Currency belonging to a small, weak, or wildly fluctuating economy and which, therefore, is not in favor with foreign exchange dealers. Examples are the Philippines peso, the Mexican peso and the Hong Kong dollar. Such currencies are not in demand in the way that big-league currencies are, such as the Deutsch mark, $US, Swiss franc and so on.

References

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See also

• Fiat currency
• Hard currency
• Monetary reform
• Private currency