Definition:
Fiat currency or fiat money is money declared by a government to be legal tender — that is, that it can be used to pay taxes and debts. A fiat is a decree or order, so fiat money is money that has value because the government says so — and only because the government says so. The U.S. dollar today is fiat money. For example, in the 1930s, the US dollar was still on a gold standard, meaning that U.S. money was, in theory, exchangeable for gold. Although modern economies depend on fiat money, it was viewed with suspicion until the middle of the twentieth century.
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