What is fiat money?

The term fiat money describes a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it.

Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro, and other major global currencies.

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