Fiat Currency

Fiat currency is money issued by a government and declared legal tender, but it is not backed by a physical commodity such as gold. Its value comes from the issuing government's authority, economic strength, and public confidence.

Central banks manage fiat currency supply and use policy tools to influence inflation and growth. Some are issuing central bank digital currencies (CBDCs) as digital forms of fiat. Most modern currencies, including the USD, are fiat currencies, unlike cryptocurrencies. IMF reference: IMF financial terms glossary.

Related Terms

Central Bank

A central bank is a country's monetary authority responsible for issuing currency, setting monetary ...

USD

United States Dollar

USD is the official currency of the United States and its territories. It's the world's primary rese...

EUR

Euro

EUR is the official currency of the Eurozone, used by 20 of the 27 European Union member states. It'...

Cryptocurrency

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates on ...

CBDC

Central Bank Digital Currency

A CBDC is a digital form of fiat currency issued by a central bank. It represents a direct claim on ...

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