Legal Definitions - fiat money

Fiat money is a type of currency that is not backed by gold or silver. It is authorized or adopted by a government as part of its currency. This means that the value of fiat money is based on the trust people have in the government that issued it.

• Paper currency issued by the government
• Coins issued by the government

These examples illustrate fiat money because they are not backed by a physical commodity like gold or silver. Instead, their value is based on the trust people have in the government that issued them.