This is far more likely to bring about regime change than economic pressure or even bombs and war (both often cause people to unite behind their nation, not to decide to throw the bums out). Water not coming out of the tap is both disastrous for daily life and a clear sign of governmental incompetence and corruption.
I don’t understand how crown jewels can be used to back currency the way that gold can. Even though they are priceless the items can’t be broken up. Gold, on the other hand, can be broken into small units to actually pay for things. (I read that a credit card-like item with a tiny flake of embedded gold can be bought in India. And of course there are gold coins down to 1/10 ounce.)
It’s more of an implicit backing. While they haven’t been formally appraised, some guesstimates place the value as high as hundreds of billions of dollars.
I’ve got an old PT Cruiser and 1964 Studebaker GT Hawk I can sell in the event I fall into dire financial straits, it’s kinda like that.