Fiat money is a currency without intrinsic value that has been established as money, often by government regulation. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.[1] It was introduced as an alternative to commodity money and representative money. Commodity money is created from a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange (such a good is called a commodity). Representative money is similar to fiat money, but it represents a claim on a commodity (which can be redeemed to a greater or lesser extent).[2][3][note 1]Government issued banknotes began to be used in 11th century China. Since then, they have been used by various countries, usually concurrently with commodity currencies. Fiat money started to dominate in the 20th century. Since the decoupling of the US dollar from gold by Richard Nixon in 1971, a system of national fiat currencies has been used globally.Fiat money has been defined variously as:
- Any money declared by a government to be legal tender.[4]
- State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.[5]
- Intrinsically valueless money used as money because of government decree.[2]
- An intrinsically useless object that serves as a medium of exchange[6] (also known as **fiduciarymoney.)[7] The term fiat derives from the Latinfiat ("let it be done")[8] used in the sense of an order, decree[2] or resolution.[9]