Fiat Definition - Glossary

Fiat is government-issued currency not backed by a physical commodity. Its value is derived from trust in the government.

Fiat is a type of currency that is issued by governments and lacks intrinsic value. Unlike commodities like gold, fiat money's value is based on the trust and stability of the issuing government. It is used as a medium of exchange, store of value, and unit of account. Central banks control its supply, influencing economic factors like inflation and interest rates. Fiat is the most common form of money worldwide. Its main advantage is flexibility in monetary policy. However, it is susceptible to inflation and requires careful management to maintain public confidence in its value.