It is the effect that counts here
And this effect is present even when two fiat currencies are competing against each other that don't have any intrinsic value (other than transnational utility). You may argue that it is not Gresham's Law, and you would probably be right, technically speaking. However, if there is such a thing or phenomenon as "bad money driving good money out of circulation" (irrespective of the form of money, i.e. whether it is sea shells, hard currency, fiat, or whatever), we have to deal with it somehow and give it a name
If you are referring to the underlying principle of Gresham’s law, which states that people prefer to dispose of a less valuable asset in the first place, this will hold in many scenarios and certainly produce an effect on the subject of discussion as well. This, at the same time, doesn’t necessarily lead to the outcome that Gresham’s law predicts.
Moreover, all known modern currency substitution scenarios showed preference for good money in the long run. We saw many cases of dollarization, but I’ve never heard of bolivarization or rupeezation. You can also check out the political crisis in Venezuela and see that even Bitcoin, with all its flaws, was capable of substituting the national currency for transactional purpose to a certain extent.
Here’s an extract from an article on
dollarization of Cambodia The riel is used by the Government and the National Bank of Cambodia for paying their employees, and is preferred by the general public for small transactions. It is also more in use in rural areas.
The dollar serves all functions of money, since it is used as:
• a valuation instrument (prices being often indicated in dollar),
• a settlement instrument (transactions being mostly settled in dollar cash), and
• a saving instrument. The dollar is used by both residents and non residents. Foreign firms, NGOs, agencies and embassies spend in dollars, including paying their employees.
Banks also prefer to carry out transactions in foreign currency. In December 2006, out of 18 banks, 8 did not accept deposits in riels, although the riel was declared by law as the country’s legal tender. Most loans were also denominated in dollars (97%). Out of 18 banks, only 4 granted loans in riels, for limited amounts.
Most banks also had their capital denominated in dollars.
Where is Gresham’s law?