fiat money

This is a government-issued currency that is not backed by any commodity such as gold or silver. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity. Most paper currencies like the dollar, pound, and euro are fiat currencies. Because fiat currencies are backed by the government, they are legal tenders. By issuing fiat currencies, a country’s central bank has greater control over the economy because it can control how much money is printed and circulated.