Quote from: Fakeman on June 24, 2011, 11:50:25 AM

Quote from: hugolp on June 24, 2011, 06:32:16 AM

Why would a government impose as legal tender a currency that it can not print and therefore can not profit from it?

There are countries that directly use USD or EUR for example as legal tender without pegging or any formal agreement with the issuing governments. They lose out on seignorage profits but they also avoid the hassle of administering a currency.

Yes, sometime the government is unable to impose a currency for a while because it does not have enough control or the population is very wary against the idea. But its not because they dont want to.

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Usually this happens only after a catastrophic collapse involve great bloodshed. But it does happen from time to time.