Category: Money

Explanation Of The Fiat Currency System

Fiat currency is a currency that is not backed by any sort of commodity, such as precious metal or an amount of food. As a result, it can fluctuate rapidly in value and is typically less stable than a currency that is based on something tangible. If a country decides to adopt fiat currency, it means that the country’s currency is no longer tied to the value of anything. The value is based only on the supply and demand for a particular currency as opposed to the amount of goods it can purchase.

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