Fiat Money
a.k.a. Fiat, Fiat currency
Money that has value because a government declares it legal tender and people trust it, not because it is…
In plain English
Money that has value because a government declares it legal tender and people trust it, not because it is backed by gold.
Almost every currency today is fiat money. A dollar note is not a claim on gold; it is worth something because the government says it must be accepted and because people trust it will keep working tomorrow.
Since the end of Bretton Woods in the early 1970s, major currencies have floated as fiat. Crypto fans often use 'fiat' to mean ordinary government money.
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