Fiat

Fiat money refers to currency that is issued by a government and has value because of the trust and authority of the issuing government, rather than being backed by a physical commodity like gold or silver. Most modern currencies, including the US dollar (USD), euro (EUR), and Japanese yen (JPY), are examples of fiat money. Fiat currencies are used for everyday transactions, savings, and investments, forming the backbone of the global financial system. Their value is maintained through government policies, central bank regulations, and the overall stability of the issuing nation's economy.

Fiat currency is the dominant form of money in the world today, largely because it offers flexibility in monetary policy. Governments and central banks can control the supply of fiat money through mechanisms like interest rates, inflation targets, and quantitative easing, allowing them to manage economic growth, employment, and inflation. This ability to regulate the money supply gives fiat currency a degree of stability and predictability, making it suitable for use in large-scale economies and complex financial systems.