BANKING AFFAIRS

Detailed explanation-1: -A government-issued currency is known as fiat money. It is not backed by a physical commodity, like silver or gold, but by the government that declared it. The value of fiat money is determined by the relationship between supply and demand and the overall stability of the government.

Detailed explanation-2: -What Is Fiat Money? 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-3: -Fiat currency, also known as fiat money, is the opposite of commodity money. The difference between fiat money and commodity money relates to their intrinsic value. Historically, commodity money has an intrinsic value that is derived from the materials it is made of, such as gold and silver coins.

Detailed explanation-4: -Fiat money generally does not have intrinsic value and does not have use value. It has value only because the individuals who use it as a unit of account – or, in the case of currency, a medium of exchange – agree on its value.

Detailed explanation-5: -Fiat money is a government-issued legal tender supported by the regime and not tangible commodities. For example, foreign currencies like the Euro and the US dollar.