BANKING AFFAIRS

Detailed explanation-1: -A fiat money is a type of currency that is declared legal tender by a government but has no intrinsic or fixed value and is not backed by any tangible asset, such as gold or silver.

Detailed explanation-2: -A fiat currency functions well when the public has enough confidence in the currency’s ability to act as a storage medium for purchasing power. Also, it must be backed by the full credit of the government that gives a decree and prints it as a legal tender for financial transactions.

Detailed explanation-3: -fiat money, in a broad sense, all kinds of money that are made legal tender by a government decree or fiat. The term is, however, usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver.

Detailed explanation-4: -Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.

Detailed explanation-5: -Detailed Solution. Gold is not considered fiat money. Fiat money is the currency issued by the government which is not backed by any physical commodity such as silver or gold. Paper currency, coins, and demand drafts are fiat money.