Fiat Currency
Fiat currency is government-issued money that is legal tender and not directly backed by a commodity like gold.
- Also known as
- government moneypaper moneytraditional currency
Fiat currency is money issued by a government and accepted as legal tender. Its value comes from law, monetary policy, economic productivity, and public trust rather than direct redemption for a commodity.
Central banks and governments influence fiat money through interest rates, reserve requirements, money creation, fiscal policy, and banking rules. These tools can support stability but can also contribute to inflation or currency stress if mismanaged.
In crypto, fiat is often the unit used for pricing, accounting, and exchange on-ramps. Stablecoins and CBDCs are different attempts to represent fiat value digitally, but they have different custody, issuer, and decentralization assumptions.
Related terms
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