BANKING AFFAIRS

Detailed explanation-1: -The value of fiat money is based largely on public faith in the issuer. Commodity money’s value, on the other hand, is based on the material it was manufactured with, such as gold or silver. Fiat money, therefore, does not have intrinsic value, while commodity money often does.

Detailed explanation-2: -Fiat money is a type of currency that is not backed by a commodity, such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometimes issued by local banks and other institutions.

Detailed explanation-3: -The gold standard is a monetary system in which paper money is freely convertible into a fixed amount of gold. In other words, in such a monetary system, gold backs the value of money.

Detailed explanation-4: -Fiat money is both physical money and legal tender and is backed by a nation’s government. Representative money is backed by a physical commodity such as precious metals or instruments such as checks and credit cards.

Detailed explanation-5: -Fiat money is a currency that lacks intrinsic value and is established as a legal tender by government regulation. Traditionally, currencies were backed by physical commodities such as silver and gold, but fiat money is based on the creditworthiness of the issuing government.