Okay and thank you for your reply.

Having their own currency is a pride thing. Having it pegged is a concession to the need to have it backed, but pegged to a basket means they aren't totally financially beholden to anyone bigger than the country.

They also have notes that are worth more than US$1000: one might not need a gym bag of US bills when it could be replaced with a fanny pack of the country's currency.

The amount of money the US has is, IIUC, slightly over $2 trillion. This country's currency probably totals to less than 1% of that.

As it is, I imagine the bank would do with the dollars as you've described.

The thing is, some US regulators, bureaucrats, and politicians—maybe some from the FBI, DEA, and a few other agencies—as well as those of other countries who have their own drug warriors, would want to inhibit such transactions.

I can easily imagine that they might push their banks to not deal with these types of banks in my fictional country, perhaps none of the banks or other financial institutions in that country, until that country changes the laws and gets in line.

With the Russian-Ukrainian war these past few years, I've been hearing about sanctions against Russia and some Russian YouTubers are talking about how hard it is to get money back to their relatives. Presumably Russia deals with partially this by maintaining a banking system in Russia where people in, say, Saint Petersburg and Vladivostok, could exchange money, including electronically, and as some countries still trade with Russia, transfers between these cities and, say, Belgrade, Brasilia, and Beijing (hey 3 "B"s!), might be similarly easy.

Some of these countries might not be too concern with this country allowing the aforementioned drug laundering because they control their own drug trade with repression. Idk.

I wonder if these would happen, and by how much, and how my fictitious country would cope with such.

I mean, because it's surrounded by US allies who also don't like money laundering? There are plenty of ways to make doing what America says basically obligatory.

As I've presently imagine it:

The country isn't so much mountainous as it is hilly. I suppose the skiing there isn't great and maybe limited to several weeks at most. I describe it as a place where snow falls, but where wild palms and citrus can grow in a microclimate. Part of it is a swamp that leads to the coast. There isn't a natural harbor, and the water nearby is too shallow, but at least they have air access.

They were occupied until the early 20th century. Lead by a great leader (and maybe with a few Americans who aren't all that pro-American) employing strategies and at times brilliant tactics against their indolent and incompetent occupiers, they get independence.

They make a treaty with this country and 3 others. These countries together might be the size and area of one of US's smallest 40 states.

The guerilla leader turns out to be a good political leader, who at the beginning might be semi-authoritarian. He pursues strong neutrality and self-reliance, and with mixed results, industrialization. There is probably conscription in the first few decades. They declare war on Germany in very late March/early April 1945 (they also try to figure out what to do with their millions of Reichmarks).

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Why didn’t others invade?

They have hills and swamps, unique language, decades of self-reliance and some preparation, and pretty well no natural sources of petroleum and natural gas.

What about an economic blockade?

A US battleship might get run aground if it comes too close, aircraft carriers (IIUC) are expensive to run, and a smaller ship might get sunk by them and force a more intense response from the US. IIRC, Bill Clinton was less interventionist than Bush (either of them), Dubya Bush was too busy with Afghanistan and Iraq, and under Trump, Hasan Piker might spend a week or 2 visiting the country and giving autographs, yelling "Viva la [name of the country]!".

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Strong economic ties to many countries, neutrality in wars, value outside economics (craftsmen).

They buy from pretty well everybody (with maybe some not too costly tariffs), sell to pretty well everybody, and are neutral (today they trade with Russia while maybe 100 of their citizens are in Ukraine's international battalions).

They aren't resource rich, but they have a reputation for self-reliance. If it wasn't for tourism they probably would have a trade deficit. I'm thinking that their currency is pegged to a basket, which includes gold, silver, USDs, €, £, ¥, and Swiss francs.