Definition of Fiat Currency
What is Fiat Currency
Fiat currency is government-issued currency which is not backed or pegged to a physical commodity, such as gold or silver. Fiat currency is backed by the government that issued the currency and its value is derived through the stability of the government as well as supply and demand fundamentals.
Fiat currency gives more control of the economy to the central banking system since the government has the control over the amount of money printed. Most of the modern paper currency in circulation is fiat currency. Examples include the US dollar and the Euro.
Glossary of Terms and Phrases
A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.
We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.