Definition of Fiat Currency

Financial Terms Beginning with F

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 currencies are typically paper currency and coins, though they can also be in digital form, such as electronic bank deposits. The value of fiat money is primarily determined by supply and demand dynamics, as well as the stability of the issuing government and its economy.

One of the main advantages of fiat money is that it allows for a flexible monetary policy. Central banks can control the money supply, adjusting interest rates and implementing other measures to manage inflation, encourage economic growth or stabilize financial markets. However, this flexibility can also lead to potential drawbacks, such as the risk of hyperinflation if a government prints too much money or currency devaluation if people lose confidence in the currency or the stability of the issuing government.

Most of the modern paper currency in circulation is fiat currency. Examples include the US dollar and the Euro.

GlobEx Markets Financial Dictionary of Terms, Phrases and Concepts

The GlobEx Markets financial dictionary is a reference resource that provides the definitions and explanations of various financial terms, phrases and concepts that are used in international finance and global investing. It includes a broad range of financial terms, such as those related to stocks, bonds, currencies, commodities, options, futures, crypto and much more.

A financial dictionary can be useful for anyone who wants to learn more about finance and investing, or who works in the financial industry. It can help clarify the meaning of technical terms and the language used in financial publications, reports and other sources.

Benefits of the GlobEx Markets Financial Dictionary

There are several benefits to using the GlobEx Markets financial dictionary, including:

  • Clarifying Technical Terminology: The financial world is filled with complex terms and language that can be confusing to those who are not familiar with it. A financial dictionary can help clarify the meaning of technical terms and make them more understandable.
  • Improving Financial Literacy: By learning the meaning of financial terms, phrases and concepts, you can improve your overall financial literacy and gain a better understanding of the workings of the financial world.
  • Enhancing Communication: A financial dictionary can help improve communication among financial professionals by ensuring that everyone is using the same terminology, phrases and concepts.
  • Supporting Research: When conducting financial research or analysis, a financial dictionary can be a valuable resource for identifying and understanding key terms, phrases and concepts.
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Overall, the GlobEx Markets financial dictionary can help improve your understanding of international finance and global investing. It is a valuable tool for anyone who works in the financial industry or who wants to improve their financial literacy.

Related Investment Terms

British Pound Sterling

Currency Risk


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