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    correction what is fiat money

    0  Views: 274 Answers: 1 Posted: 13 years ago

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    Fiat money


    Inconvertible paper money made legal tender by a government decree.






    Definition of 'Fiat Money'


    Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith.


    Investopedia Says

    Investopedia explains 'Fiat Money'


    Most of the world's paper money is fiat money. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation. If people lose faith in a nation's paper currency, the money will no longer hold any value.


    http://www.investopedia.com/terms/f/fiatmoney.asp


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