Fiat money

Fiat money is currency issued by a government that has no intrinsic value but is accepted as legal tender because the government declares it valid for transactions. Its worth relies on trust in the issuing authority rather than physical backing like gold or silver. Examples include paper bills and digital currencies used worldwide today. This system allows governments to manage the economy more flexibly, influencing inflation and interest rates, while the value of fiat money depends largely on public confidence rather than intrinsic worth.