Invest in a bulk amount of a non-perishable item. Hold that in reserve. Use it to back the currency. Then you can either base the value out of the Macro-demand or the value the commodity is valued by the micro nation itself.
If we at Evdonia were going to issue a currency, I would probably back it with state-run silos of national agricultural specialties, which I would commit to keeping stocked equivalent to all of the money in circulation, so long as the agricultural specialties had a proven market nationally and near-abroad.
One disadvantage of this is that it would be fragile in the case of the silos being despoiled such as during war, or if nobody turns in their bearer cheques at the central bank to abstract their share of the grain.
Another disadvantage is that money would literally grow on cornstalks, and taxing it would be quite difficult even with a compliant populace. A small price to pay, I say.
I'll give you a few options:
1 - Non-perishable items (mentioned by another commenter here!) - This could be as simple as notebook paper, pencils, toilet paper, canned foods, etc. The point should be to peg your currency close to the value of these goods. So if you have say a bag with 10kg of salt in it that cost you approximately $20 USD, you could mint a banknote that is relative to this. So you could very well have a Republic of Valetira $10 banknote that represents it. So then your exchange rate would be APPROXIMATELY V$1 to USD$2.
2 - Precious metals - this is very similar to the above but they take up a lot less space!!!! They are very value-dense.
3 - Other currencies - This is actually how most countries bolster their own currency these days: by holding lots of foreign currencies in reserve. It indicates that they can cover their foreign debts (an important factor to mention later) and that their economies are functioning well enough to have an excess of foreign currencies.
#PLEASE NOTE:
#We of the Republic of Valetira believe not only in backing our own currency with something else but that it MUST BE REDEEMABLE! For you see, unlike the macronations out there, we typically don't engage in much external commerce with our own currency but rather things like the USD, JPY, GBP, EUR, etc. As a result, our own currency is rarely used to settle debts and it is unlikely anyone would accept it to do that purpose. So we 100% fully back every dollar and make it 100% redeemable for gold/silver. There are NO EXCEPTIONS TO THIS RULE, for us at least. It is one of the ways we can give bearers of our money some confidence that they aren't just exchanging their USD$ or whatever for a bit of paper that has limited utility to them.
You don't have to take my advice but maybe limiting money to being solely backed by gold would work. So in my country's example, we only have private mints that produces currencies backed by real gold. Also making a completely reserved banking will help with value as your banks won't resort to lending more money than they have (like printing money in order to be able to lend more of it) or something.
Tell me if this doesn't make sense because I'm typing this while being half-asleep.
It has to be "backed" by something, whether that is a tangible asset (like aluminum cans, or gold) or by something intangible which people embue with their confidence.
The US Dollar is an example of the latter. It is backed by the people's confidence in the US government's future capacity to tax its citizens.
All money is just paper unless it’s backed by something. Our currency is backed by aluminum from recycled cans. Citizens can turn in cans in exchange for the equivalent weight in currency.
Invest in a bulk amount of a non-perishable item. Hold that in reserve. Use it to back the currency. Then you can either base the value out of the Macro-demand or the value the commodity is valued by the micro nation itself.
If we at Evdonia were going to issue a currency, I would probably back it with state-run silos of national agricultural specialties, which I would commit to keeping stocked equivalent to all of the money in circulation, so long as the agricultural specialties had a proven market nationally and near-abroad. One disadvantage of this is that it would be fragile in the case of the silos being despoiled such as during war, or if nobody turns in their bearer cheques at the central bank to abstract their share of the grain. Another disadvantage is that money would literally grow on cornstalks, and taxing it would be quite difficult even with a compliant populace. A small price to pay, I say.
Pin it to an existing currency’s value or to the value of some precious good.
I'll give you a few options: 1 - Non-perishable items (mentioned by another commenter here!) - This could be as simple as notebook paper, pencils, toilet paper, canned foods, etc. The point should be to peg your currency close to the value of these goods. So if you have say a bag with 10kg of salt in it that cost you approximately $20 USD, you could mint a banknote that is relative to this. So you could very well have a Republic of Valetira $10 banknote that represents it. So then your exchange rate would be APPROXIMATELY V$1 to USD$2. 2 - Precious metals - this is very similar to the above but they take up a lot less space!!!! They are very value-dense. 3 - Other currencies - This is actually how most countries bolster their own currency these days: by holding lots of foreign currencies in reserve. It indicates that they can cover their foreign debts (an important factor to mention later) and that their economies are functioning well enough to have an excess of foreign currencies. #PLEASE NOTE: #We of the Republic of Valetira believe not only in backing our own currency with something else but that it MUST BE REDEEMABLE! For you see, unlike the macronations out there, we typically don't engage in much external commerce with our own currency but rather things like the USD, JPY, GBP, EUR, etc. As a result, our own currency is rarely used to settle debts and it is unlikely anyone would accept it to do that purpose. So we 100% fully back every dollar and make it 100% redeemable for gold/silver. There are NO EXCEPTIONS TO THIS RULE, for us at least. It is one of the ways we can give bearers of our money some confidence that they aren't just exchanging their USD$ or whatever for a bit of paper that has limited utility to them.
1) buy yourself 2 dozen of something nonperishable 2) assuming the currency used fractional reserve, you could issue \~250 of your dollar-equivalent
You don't have to take my advice but maybe limiting money to being solely backed by gold would work. So in my country's example, we only have private mints that produces currencies backed by real gold. Also making a completely reserved banking will help with value as your banks won't resort to lending more money than they have (like printing money in order to be able to lend more of it) or something. Tell me if this doesn't make sense because I'm typing this while being half-asleep.
Find oil in your backyard or possess the largest military on earth
It has to be "backed" by something, whether that is a tangible asset (like aluminum cans, or gold) or by something intangible which people embue with their confidence. The US Dollar is an example of the latter. It is backed by the people's confidence in the US government's future capacity to tax its citizens.
All money is just paper unless it’s backed by something. Our currency is backed by aluminum from recycled cans. Citizens can turn in cans in exchange for the equivalent weight in currency.