There is no precise definition of an economic collapse. The term has been used to describe a broad range of bad economic conditions, ranging from a severe, prolonged depression with high bankruptcy rates and high unemployment (such as the Great Depression of the 1930s), to a breakdown in normal commerce caused by hyperinflation (such as in Weimar Germany in the 1920s), or even an economically caused sharp increase in the death rate and perhaps even a decline in population (such as in countries of the former USSR in the 1990s).
Often economic collapse is accompanied by social chaos, civil unrest and sometimes a breakdown of law and order.
An example of an economic collapse is when the Great Depression happened.
During severe financial crises, sometimes governments close banks. Depositors may be unable to withdraw their money for long periods, as was true in the United States in 1933 under the Emergency Banking Act. Withdrawals may be limited. Bank deposits may be involuntarily converted to government bonds or to a new currency of lesser value in foreign exchange.
Many believe that purchasing precious metals such as gold or silver prior to an economic collapse will provide a means of purchasing needed items or to be used in bartering since precious metals tend to hold their value.
During a financial crisis, items for bartering may be a matter of life and death. Items such as food, water, water filtration, gasoline, medical supplies, ammo, batteries, candles, cigarettes, propane, and even books to name but a few.
The first step in prepping for an economic collapse is to create a Plan. Then follow it. Practice it. Make sure that everyone in your family knows their part in the plan.