Fiat Currency

What is Fiat Currency?

Fiat currency is a government-issued currency that is not backed by a physical commodity, such as gold or silver. Its value is derived from the stability of the issuing government and the trust that people have in its use as a medium of exchange.

Why It Matters

• It gives central banks greater control over the economy through monetary policy.

• It provides a stable and widely accepted medium for daily transactions and trade.

• It serves as the primary unit of account for most global financial systems.