Fiat Currency

A national currency, Fiat Currency is a government-issued currency that is not backed by a physical commodity. Opposite of a commodity money, Fiat currency has no intrinsic value, only dependent on the responsible fiscal policy and regulation by the government. The value of fiat money is derived from the relationship between supply and demand, with modern paper currencies including the U.S. dollar, the euro, and other major global currencies. Fiat money serves as a good currency if it can handle the roles that a nation's economy needs for its monetary unit—storing value, providing a numerical account, and facilitating exchange. Fiat money’s value is derived from the relationship between supply and demand, with one of its disadvantages being the government’s overprinting, resulting in hyperinflation.