fiat money

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fiat money

(fī`ət, fī`ăt), inconvertible money that is made legal tender by the decree, or fiat, of the government but that is not covered by a specie reserve. It is commonly understood to be of paper, although it may also consist of overvalued metal coins. The circulation of fiat money may lead to inflation, whereas money redeemable in gold or other securities is held much less likely to do so. Under conditions of proper monetary management, however, fiat paper money can be a stable currency. In fact, contemporary American money is essentially fiat money. All Federal Reserve notes and most circulating coins are money because the government says they are, not because they are backed by precious metals. Earlier, less stable examples of fiat paper money were the continentals issued by the American government during the Revolutionary War, the assignats issued during the French Revolution, and the greenbacks issued by the U.S. government during the Civil War. Most such issues were accompanied by severe price rises.


See W. C. Mitchell, History of the Greenbacks (1903, repr. 1960); F. Reinfeld, Story of Paper Money (rev. ed. 1960).

References in periodicals archive ?
VC is distinct from fiat currency or real currency-the coins and paper money minted and printed by the central bank of a country; designated and circulated as legal tender in the country; and used and accepted as a medium of exchange in the country.
The technological hurdles and seizure risk uncertainty of N-FADs can be summed up by saying that the general transactions demand for N-FADs is likely to be weak for the time being due to increased set up costs and risk relative to standard fiat currency. Moreover, with a currency such as bitcoin, whose value fluctuates widely, risk assessment for the general populace is very difficult.
Electronic money is part of the centralised system and a digital representation of a fiat currency. Considering all of the above, it is difficult to argue at the current stage that bitcoin is a currency proper in Islamic law and could have the potential to create an alternative medium of exchange in Islamic finance as compared to traditional Riba-backed central bank fiat currency.
Even worse, you can attack Bitcoin in order to sabotage and destroy it -- perhaps so that your own cryptocurrency or fiat currency can gain popularity in its stead.
SAME FUNDAMENTALSMany leading economists have therefore argued that cryptocurrencies are a hoax because they are not pegged on any economic fundamentals, but on the sentimental and speculative value of the cryptocurrency.What they conveniently forget to tell the public is that fiat currency, whether it is the dollar, euro or Kenyan shilling, suffers the same critique ndash they stopped being pegged on the economic value of minerals or gold reserves way back in the 1930s after the great depression in the United States.
He was specific in saying that neither his company nor MTC have promised any returns in the form of fiat currency.
(13) The exchange rate for Airpoints to fiat currency depends on how the issuer prices the goods and services that can be purchased with Airpoints.
The paper suggested that fixing the price to fiat currency with an implicit government-backing could alleviate the problem of virtual currencies' volatility and their current usage an investments rather than exchange tools.
Fiat currency--a clear fraud upon its unwitting or unwilling victims--exists because the state that issues the fiat currency commands acceptance of its central bank's worthless paper as payment of debts, operating over the barrel of a gun rather than by providing goods and services that willing customers choose to buy (such as banking in this case).
One of these--the Soft Money approach--we are quite familiar with today: a process by which a committee of government bureaucrats manages a floating fiat currency of some sort, on a day-to-day and ad hoc basis.
Created in 2009 by a secluded (and still anonymous) mathematical genius, the purpose of the Bitcoin was to give the masses an alternative to the traditional fiat currency (a term that describes any money declared by a government to be legal tender).
"The supply for a fiat currency has to grow as fast as the economy to be effective.