Fiat money is a form of currency that is declared legal tender. Fiat money definition: money declared by a government to be legal tender though it is not convertible into... | Meaning, pronunciation, translations and examples If you're looking for a definition, here you go - Fiat money is currency that a government has declared to be legal tender, but is not backed by a physical commodity. Fiat money is a currency that lacks intrinsic value and is established as a legal tender by government regulation. Most modern economies are based on a fiat money system. Unlike commodity money, fiat money is not backed by any physical commodity. Hence, the value of fiat money is derived from the relationship between supply and demand. By definition, its intrinsic value is significantly lower than its face value. Instead, its value is derived by government and the trust people place in its value. When applied to paper money, fiat currency refers to the scary notion that our dollar has value only because the government says it does. WRITTEN BY PAUL BOYCE | Updated 12 September 2020. An example of fiat money is paper money. What is Fiat Money. Share Tweet LinkedIn Like. What is Fiat Money? Fiat money is … Fiat Money Definition Characteristics, Examples, and Advantages. Fiat definition is - a command or act of will that creates something without or as if without further effort. The word “fiat” is Latin in origin and refers to an arbitrary order issued by a government or other authoritative figure. What’s it: Fiat money is a currency with no intrinsic value but is a legal tender in an economy. How to use fiat in a sentence. Entry and Exit. Examples of fiat money include coins and bills. ‘Then, add fiat money and foreign exchange controls to the mix and it's no wonder investors and the press get so mixed up.’ ‘Among the most gruesome consequences of fiat money, and of paper money in particular, is its ability to extend the length of wars.’ Crypto exchanges that accept fiat currency make life easier for newcomers to the world of digital coins. Fiat Currency: What It Is and Why It's Better Than a Gold Standard The value of money has to be has to be based on something of value. Now for the explanation. This includes money in circulation such as paper money or coins. Updated October 25, 2020. Fiat Money . The face value of fiat money is what you see, and it appears on the paper. You sign up for an exchange, deposit money and you can hit the ground running. Fiat Money: Definition, How it Works, Functions, Pros, Cons. 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