Comment by orwin

It works very well in rich countries, but it is expensive, especially if the volume of exchanged currency is low. This is one of the reason behind the Euro, countries realised it would be way less expensive to defend the currency if they banded together. This is also a big why ex french colonies keeps colonial money, because that currency is pegged to the Euro and that peg protect it (the only way to get out cheaply is to do a West African Union or something similar, which is why anti-colonialists are big on the subject. They are right).