Fiat Money Definition

Fiat Money is a currency that a government has declared to get legal tender, but just isn’t backed by a physical commodity. The value regarding fiat money comes from the relationship between supply and demand rather than the value of the material which the money uses. Historically, most currencies were according to physical commodities for instance gold, but fiat money is reliant solely on trust. Fiat is this Latin word with regard to “it shall be”.