Modified on Wed, 26 Jul 2023 at 03:37 PM

Fiat or fiat money is a currency a government has declared legal tender, but a physical commodity does not back it. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made. Fiat money only has value because the government maintains that value or because two parties agree. Fiat money was first introduced as an alternative to commodity-backed money.

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