Except they're the official money of a country. that is something the general people often don't understand with fiat currency. The fact that they are the official currency for a country, used to pay the salaries of state employees, and to pay taxes, as well as the central bank policy. All of this gives it an official utility, and thus an official value.
It's way more than that. Currencies vary based on the entire productive capacity of a country. When people decide that Japanese cars are reliable, that Costa Rica's beaches are lovely, or that the Russian private banking system can't be trusted, that dramatically affects the price of currencies. Currencies are a proxy for a country's whole economy not just the public sector.
You could imagine the private sector running on a different economy than the country’s one. It happens when the government has gone bankrupt ( because of war or unsustainable debt, for example). But even in that case, the money still has some value, and can’t completely disappear, even if state employees run to the bank to exchange their salary against us dollar. Their value are correlated to the trust and ability to function of a state.
