“What kind of money is that?” the Army guy asks.

Waterhouse pulls a bill from the top of the bundle.  The top is printed in Japanese characters and bears an engraved picture of Tojo.  He flips it over.  The back is printed in English: TEN POUNDS.

“Australian currency,” Waterhouse says.

“Don’t look Australian to me,” the Army guy says, glowering at Tojo.

“If the Nips had won . . .” Waterhouse says, and shrugs.  [. . .]

The fine print on the bill says, IMPERIAL RESERVE BANK, MANILA.

“Sir!  You okay?” the Army guy says, and Waterhouse realizes he’s been thinking for a while.  [. . .]

He was thinking about whether it was okay to take some of this money with him.  It’s okay to take souvenirs, but not to loot.  So he can take the money if it’s worthless, but not if it is real money.

Now, someone who was not so inclined to think and ponder everything to the nth degree would immediately see that the money was worthless, because, after all, the Japanese did not take Australia and never will.  So that money’s just a souvenir, right?

Probably right.  The money is effectively worthless.  But if Waterhouse were to find a real Australian ten-pound note and read the fine print, it would also probably bear the imprimatur of a reserve bank somewhere.

Two pieces of paper, each claiming to be worth ten pounds, each very official-looking, each bearing the name of a bank.  One of them a worthless souvenir and one legal tender for all debts public and private.  What gives?

What it comes down to is that people trust the claims printed on one of those pieces of paper but don’t trust the other.  They believe that you could take the real Australian note to a bank in Melbourne, slide it over the counter, and get silver or gold—or something at least—in exchange for it.

Trust goes a long way, but at some point, if you’re going to sponsor a stable currency, you must put up or shut up.  Somewhere, you have to actually have a shitload of gold in the basement.  Around the time of the evacuation from Dunkirk, when the Brits were looking at an imminent invasion of their islands by the Germans, they took all of their gold reserves, loaded them on board some battleships and passenger liners, and squirted them across the Atlantic to banks in Toronto and Montreal.  This would have enabled them to keep their currency afloat even if the Germans had overrun London.