I'm creating a country, and thinking of a future currency solution. Currently we use AUD, we eventually plan on creating our own currency the Ark. The Government plans on pegging the Ark directly to AUD, and citizens will be able to convert 1 AUD directly to 1 Ark, through our central government bank. 1 Ark back however will be $0.975AUD This will ensure a stable conversion and give an incentive to citizens to forfeit their AUD to Arks. The Government will maintain the approximate value (97.5% of Arks) to AUD in the case that every citizen wants to convert back to AUD.
However we plan to eventually de-peg from the AUD, so our government can print/digitize more currency, knowing that it will inflate the currency. By creating jobs & selling resources to create foreign reserves to buy-back Arks and reverse inflation. Regardless it's irrelevant what we do after we de-peg.
My questions are:
- Can our government create currency while pegged to another?
- How will the inflation of the AUD affect our currency & value?
- How should we safely and stably transition when we de-peg our currency?
- Not sure if this should be posted in
money.stackexchange.com. But I posted it here for the world building aspect.