What is Fiat Money?
Simply said, fiat currency is the legal name for money that gets its value from a government's issuance rather than a physical object or commodity. The primary determinants of the value of this sort of money are the government's strength and power. The fiat currency system is widely used for transactions involving various commodities and services, as well as for investing and saving. But as time went on, it became impractical for governments to store enough precious metal to support each coin and piece of paper money, leading to the widespread use of so-called fiat currencies. A fiat currency's credibility depends on the stability of the government that issues it and the central bank that controls its supply. Here is a more in-depth look at the fiat-currency systems that underpin contemporary economies. The Latin word fiat, which often refers to a formal authorization or edict. Consequently, the term "fiat money" refers to a government decree that gives these curr...