According to New Scientist, a tech-destroying solar flare could hit Earth within 100 years. It could knock out our electrical grids, satellite communications, and the internet. It might also erase data that is stored on financial servers such as bank account balances.
Let's imagine something like that would happen, and all of the world's financial data would be erased. Nobody knows who owns what anymore. All of the world's account balances and stock/bond portfolios are completely nullified due to the effect of the solar flare.
In this case, only the physical currency (coins and bank notes) that is currently in circulation remains. How would a solar flare event like the one described above affect the value of this remaining currency? On the one hand, it is imaginable that rapid deflation would occur because the total money supply would suddenly be greatly diminished. After all, 92% of the worlds currency currently exists in a digital form. So that would mean that 92% of all the money would simply vanish.
On the other hand, I can also imagine rapid hyperinflation would occur. Most if not all of the world's currencies is fiat money. Which means its not backed by gold or silver but purely based on trust. I can imagine people would also lose trust in the value of the currency if most of it suddenly disappears.
So what would be more plausible? Hyperinflation or hyperdeflation.