Fiat Currency

Fiat currency refers to any government-issued currency that serves as legal tender within a specific nation, government, or regional jurisdiction. Unlike commodity-backed currencies, fiat currencies derive their value from the trust and confidence placed in the government that issued them. Functioning as a regulated medium of exchange, store of value, and unit of account, fiat money must possess attributes such as durability, portability, divisibility, uniformity, acceptability, and a limited supply. Most contemporary paper currencies, including the U.S. dollar, euro, and yen, are examples of fiat currencies.