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Fiat money

Fiat money is a currency (a medium of exchange) established as money, often by government regulation, that does not have intrinsic value. Fiat money does not have use value (inherent utility, such as a cow or beaver pelt might have), and has value only because a government maintains its value, or because parties engaging in exchange agree on its value. It was introduced as an alternative to commodity money (a medium which has its own intrinsic value) and representative money (money which represents something with intrinsic value). Representative money is similar to fiat money, but it represents a claim on a commodity (which can be redeemed to a greater or lesser extent).Government-issued banknotes were used first during the 11th century in China. Since then, they have been used by various countries, usually concurrently with commodity currencies. Fiat money started to predominate during the 20th century. Since President Nixon's decision to decouple the US dollar from gold in 1971, a system of national fiat currencies has been used globally. Fiat money can be: Any money declared by a government to be legal tender. State-issued money which is neither convertible by law to anything else, nor fixed in value in terms of any objective standard. Intrinsically valueless money used as money because of government decree. An intrinsically useless object that serves as a medium of exchange (also known as fiduciary money.)The term fiat derives from the Latin word fiat, meaning "let it be done" used in the sense of an order, decree or resolution.