Fiat currency

From TinWiki.org

A Fiat Currency is a currency that is not backed my material substance such as gold, and is the most common type of currency used today, although they are rarely called by this term, instead usually being called 'Credit Based Economies'.

The word 'Fiat' in Latin can be roughly translated into 'Let it be done' in English. What this is saying is that the currency has value because an authority as deemed that it be so. This differs from the systems used in the past, most notably the Gold Standard. In a system such as the Gold Standard currency levels in a country are dependant on the level of gold in that country due to the governments obligation to allow the currency to be traded for gold at any time. This type of system tends to give a currency more value materially since it can be insured for its value with the backing substance, however it heavily restricts a countries options in terms of monetary policy; that is, they can't regulate their money supply as easily which can cause economic slow down if not properly managed. For this reason, most countries now adopt the less stable yet more controllable Credit based currency or Fiat currency.

See Also

• Amero
• Euro
• Liberty Dollar