Posting because it's an interesting thinky topic, it hasn't gotten all that much attention, and I've seen a post by the OP suggesting that they might enjoy further thought on it.
So, there's a few things. Let's assume that it's a single-currency system. That is, the folks with actual power in the area (whoever that may be) have arranged it so that Manaform X, which is both produced and consumed, is also the base currency of the realm. This is probably for one of two reasons.
First, perhaps they're the primary consumers of this thing. The thing that you do that makes something a currency is that you, as a government, declare that it's legal tender for certain important things that enough people care about, and generally say "Yes, this thing has value, and I'll happily take payment in this form." For normal currency forms this is a little risky, because there's always the possibility that the rest of the world will decide that it's totally not worth that much, and take you up on your offer, and you'll be left propping up the value by buying tons of it, and you'll wind up with massive amounts of it in your vaults and very few people who are willing to take it from you until the market recovers. Inflation (for whatever reason) can *burn*... but if it's a rapidly consumable and highly useful good, it's much less of a problem, because you can productively remove as much as you want from circulation. If you have some way of correctly identifying the quantity of resource in question, it also gets a lot harder to counterfeit and/or do the equivalent of coin clipping. That can take a lot of the mess out of monetary policy. So... the effects on it as a currency are pretty nice, in some ways. The problem comes around the other side, when you try to treat it as a resource rather than a currency, because if you have some need that's going to suddenly consume a lot of the stuff, you're stripping all of the money out of the economy. Worse, if it's a one-time cost, and it's something that gets produced pretty consistently, or can be produced by everyone, then people aren't going to want to lower prices, because they know the money is going to come trickling back into the system pretty soon, and they'll be better off if they just wait to sell.. which means that the economy can slow down drastically, waiting for the water to come back. Worse than that, though, is the fact that if one of your critical resources *is* your money, and you suddenly need to consume a lot of it, to the point that you want to drain it out of the local economy, what do you trade for it? The point of a unified currency is that it's the one thing that basically everyone will take for the stuff they have. Basically, it means that the only way you can accumulate enough of Ingredient X for the really *large* expenditures (whatever that means for you personally) is to save up over time. On the flip side, if, for whatever reason, you find yourself not consuming as much, eventually you'll start seeing inflation as the money supply increases, and then you'll see your overall magic production wane, as it becomes less and less worthwhile to do the magic-thing-creation task, and people do less of it. It's still not as bad as what fiat currency can get up to, though, assuming that there's still *some* consumption. If, for whatever reason, the demand is simply greater than the supply can sustain or, worse, the max demand cap is less than the minimum production (like, the people have an ancient legal obligation to supply X amount of blood each, but we have far more people now, and the number of vampires is no greater, and the blood keeps piling up) then that could start being a real problem, but if the demand per consumer is highly flexible, this is much less of an issue.
Oh, but the flip side of that is where it comes from. If the source is also controlled by those in power, then everything is simpler... they have a closed-loop production/consumption thing going on, and the monetary supply is just some that they've diverted so that people have a functioning currency to use in their economy. It's simple, it's straightforward, and the ability to add money to the economy (by diverting more) or remove it from (by consuming more) simplifies control of the thing. The real threat there is that people may start exporting the stuff... every spirit crystal that gets sent somewhere else is another such that you won't be able to eat. The closest thing to a fail state is that one of the rulers might decide that he doesn't like the idea of all of those spirit crystals out there running around, not getting eaten, and switch to a different, more weakly-backed currency.
Note that this is all by comparison with countries from hundreds of years ago. By comparison with today's markets, the fact that it's not a fiat currency means that monetary policy is a lot harder to enact, simply because the currency is not a dead thing.
Side note: I think it might be kind of entertaining to see a magic world with different countries that had different currencies because they had different magical elites, and therefore their magic stuff was flavored differently. The exchange rate of blood for Spirit Crystals could depend on all *sorts* of interesting things.
Whoof. There's a *lot* to unpack there, and I think I've run out of ergs, mostly. Still, giving at least a bit of attention to your words, and assuming the kind of power differential we see in xianxia (where things that are strongly desirable to the powerful can lead to overwhelming pressure on the people)...
- MIning for spirit crystals: The demand is high, and the supply is ever uncertain. New mines are pushed aggressively, whenever they can be found, and hints that the supply is drying up can cause the value of spirit crystals to surge (thus causing major deflationary spikes). Wiser heads with ample resources can play those semi-predictable monetary spikes by keeping supplies on hand. Of course, that's a source of easy money to the right institutional investor, which means that the government probably reserves that right to itself after a while. There is a national depository that makes a tidy profit every year evening out the paranoia spikes, and individuals are not permitted to hold more than a certain amount in their vaults at any one time (dependent on social class/cultivation level/whatever). This smooths things out for the most part, as people get comfortable with the idea that the depository is there, but if/when the depository ever runs dry, there's going to be a massive depression and resulting societal collapse, as the cultivators rapidly do whatever they can to suck every remaining dreg of crystal out of the economy.
- Resource is Harvested: there's a regular source, but it requires land and effort, and may require specific kinds of land. This... is in some ways pretty similar to things like the system from the Tokugawa Shogunate, where large quantities of money were measured in rice (large quantities of rice). The leadership is, of course, going to maintain overlordship over the land that produces this stuff, which means they get a significant cut. the farmers themselves will get what remains, which they'll then have to use to trade for goods and services of their own. Noble cultivators get the seeds from taxes, while lower-tier cultivators get theirs either from serving a noble lord or from producing some good or service that they can use to trade for them on the open market. There will be years of good harvest and years of poor harvest - speculating on the seed harvest will drive a degree of market volatility, and variability in how much consumption goes on. Poorer cultivators will tend to follow the market - consuming more in times of plenty and less in times of want. The particularly high nobles may do the opposite - consuming massive supplies of magic in lavish displays (whatever that entails) at times when the seeds are most expensive, just to demonstrate that they can. If the seeds have significant military value, then judging the monetary supply of your foe is going to be a big deal, and it's possible that the harvests will get sabotaged at times.
- Resource is Handcrafted: There's something that almost everyone can do with their time that produces a certain basic product that's worth a baseline of money. By extension, the world has a minimum wage. As other parts of the economy heat up, people will be pulled off of "craft mana" tasks onto other things, and the overall mana produced will go down. Everyone's getting paid, but no one is creating the money, and the parts of the economy that depend on this stuff start to get squeezed, as monetary supply and prices drop - not because everything else is worth less, but because the money is worth more. It becomes increasingly difficult to stay ahead of the value of mana-forming. As the economy gets worse, and people lose work, they default to creating mana, and using that to buy things. That's a useful safety net, for a while, but as the economy tanks further, and more and more people start doing this, you get more and more money in the economy, and the entire thing goes inflationary. Eventually, creating money simply doesn't pay the bills. So... if we ignore the consumers for a moment, booms tend to be self-correcting to a degree, and busts tend to get inflationary and *ugly*. On the consumption side, then, you can manage the inflationary suck thing by drinking in all the spare mana and finding a use for it... as long as you can come up with enough basic food resources to support all of the manaforgers. What it really does, though, is make it very hard to have a hyper-exploitative industrial revolution scenario where you want to oppress a specific segment of the population enough that they will agree to do terrible, terrible jobs for lousy pay, because in order to get there, you'd have to basically make manaforging nonviable as a way to make a living, and your mage-types may well not cooperate with you on that one.
Just a few thoughts.
