Fiat Money

Fiat money is a currency established as money, often by government regulation, but that has no intrinsic value. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.[1] It was introduced as an alternative to commodity money and representative money. 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).[2][3][a] Government issued banknotes were first used in 11th century China. Since then, they have been used by various countries, usually concurrently with commodity currencies. Fiat money started to predominate in the 20th century. Since the decoupling of the US dollar from the gold standard by Richard Nixon in 1971, a system of national fiat currencies has been used globally.

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