FIAT

FIAT is a term used in the context of currencies issued by governments that are not backed by a physical commodity, such as gold or silver. This means that the value of FIAT currency is not directly backed by raw materials or other physical assets. Instead, its value is based on the public’s confidence in the issuer, the country’s government.
The main features of FIAT currencies include:
Dependence on the government: FIAT currencies are issued and regulated by national governments or financial institutions under their control. This means that economic policies, government decisions and the political situation can affect the value of the currency.
No physical collateral: Unlike historical forms of currency, such as gold, FIAT currencies are not backed by a physical asset. Their value comes from public acceptance and trust.
Regulation: Governments and financial institutions have control over the issuance, circulation and regulation of FIAT currencies. They can enact various economic policies, such as issuing new money, interest rates and controlling inflation.
Legality as a means of payment: FIAT currencies are legal tender in the country that issues them. Accepting them is mandatory for transactions in a given geographic area.
Examples of FIAT currencies include the U.S. dollar (USD), the euro (EUR), the Japanese yen (JPY) and many others. Although FIAT currencies are not backed by the value of a physical good, they are a key component of the global economy and play an important role in everyday transactions and international trade. Today, most economies operate on a system based on FIAT currencies.