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this post was submitted on 19 Aug 2024
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TenForward: Where Every Vulcan Knows Your Name
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I think it works as a sort of reverse local currency that the federation administration exchanges at given rates for trade outside the federation, but cannot be spent within its domain and has no direct value to its citizens.
We also know that at least energy credits / transporter rations exist, so my guess is the actual currency is the power required to do things, like transport or replication. Average people in the federation probably have a fairly large allotment of energy to spend for themselves and rarely need any extra, so they have no real use for the currency aside from interacting with other cultures or possibly exchanging it with the federation's external commerce administration.
The UFP doesn't have an internal currency, per se, but other planets, species, etc do. In maintaining trade and relations they still provide goods and services which, depending on the race, would be more inclined to pay for it instead of trade or barter. Maybe those funds get distributed as sort of a UBI for all citizens, or added to a slush fund for those involved in said transactions? Bob the federation civilian has 10,000 Fed Credits, which can be used to purchase a bottle of Klingon Blood wine and hand crafted Mek'Leth the next time he catches a ride on a Federation transport to Qo'noS.
Maybe even on a starship, supply runs or something like it are done which ends in compensation of some sorts. Those funds can get distributed to the crew, so next time they're in port on another planet they can purchase local goods.
I like to think the federation can synthesize latinum but keep it under wraps for fear of disrupting/inflating their trade agreements.
Edit: s/platinum/latinum