fiat money

noun

Definition of fiat money 

: money (such as paper currency) not convertible into coin or specie of equivalent value

Examples of fiat money in a Sentence

Recent Examples on the Web

While little public information exists about how tether is created, the currency generally trades for about $1 because each coin is supposed to be backed by $1 of fiat money in a bank. Matt Robinson And Matthew Leising, latimes.com, "Bitcoin's price has been manipulated with another cryptocurrency: tether, professor says," 13 June 2018 Bitcoin is a revolt against fiat money**, and an all-meat diet is a revolt against fiat food. Mike Albo And Amanda Duarte, Town & Country, "The Official Bitcoin Billionaire's Handbook," 6 Mar. 2018 Its code ensures that no more than 21m coins can ever be created; that sets bitcoin apart from fiat money, which central banks can create at will. The Economist, "A bit on the sideBitcoin is a speculative asset but not yet a systemic risk," 16 Dec. 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'fiat money.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of fiat money

1876, in the meaning defined above

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The first known use of fiat money was in 1876

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More Definitions for fiat money

fiat money

noun

Financial Definition of fiat money

What It Is

Fiat money refers to any currency lacking intrinsic value that is declared legal tender by a government.

How It Works

As valid currency solely by virtue of a government declaration, fiat money is not backed by any commodity, such as gold, but only by the faith of the bearer. In this respect, unlike currencies backed by gold or silver, fiat money does not have any intrinsic value (e.g., paper money and much coinage). The U.S. dollar is an example of fiat money.

Why It Matters

Fiat money allows the declaring government to employ virtually any material, such as paper (which is lightweight and convenient for carrying), as a medium of exchange. However, since the value of fiat money lies solely in the faith of those using it, its value can be easily diminished and result in rapid inflation.

Source: Investing Answers

More from Merriam-Webster on fiat money

Britannica.com: Encyclopedia article about fiat money

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