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LSDefine
Simple English definitions for legal terms
soft currency
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A quick definition of soft currency:
A soft currency is a type of money that is not backed by reserves, which means its value can change quickly and unpredictably. This is different from hard currency, which is backed by reserves like gold and silver. Soft currency can be risky to use because its value can decrease rapidly, making it less valuable for buying goods and services. Examples of soft currency include some types of digital currency and certain currencies used in developing countries.
A more thorough explanation:
Definition: Soft currency is a type of currency that is not backed by reserves, which makes it subject to sudden changes in value.
- The Zimbabwean dollar is an example of soft currency. In 2009, the government had to abandon the currency due to hyperinflation, which caused its value to plummet.
- The Venezuelan bolívar is another example of soft currency. In recent years, the country has experienced high inflation rates, which have led to a significant devaluation of the bolívar.
These examples illustrate how soft currency can be unstable and unpredictable, which can make it difficult for people to use it as a reliable medium of exchange.