Simply means supply and demand sets exchange rates, not central banks...

The fiat doesn't have to be "backed" necessarily, the fiat exchange rate can float be volatile against those things based on economic factors while they simply act as an independent measuring stick for value.

Say you have Euros and want Dollars to do a deal internationally, your exchange rate would ultimately be the same as the conversion from Euros to Bitcoin/Gold back to Dollars. That's how you soft fork the financial system we have today into the Bitcoin Standard of tomorrow.

A country having a trade deficit would need to sell gold/Bitcoin to buy foreign currency with which to buy stuff, so by hoarding gold or Bitcoin China and the US are building foreign currency reserves for a future where there are no globalist swap lines.