Fiat money is money that derives its value from government regulation or law. The term fiat currency is also used when the fiat money is used as the main currency of the country. The term derives from the Latin fiat ("let it be done", "it shall be").
Fiat money originated in 11th century China, and its use became widespread during the Yuan and Ming dynasties. During the 13th century, Marco Polo described the fiat money of the Yuan Dynasty in his book The Travels of Marco Polo. The Nixon Shock of 1971 ended the direct convertibility of the United States dollar to gold. Since then all reserve currencies have been fiat currencies, including the U.S. dollar and the Euro.
Read more about Fiat Money: Characteristics, Chartalism, Loss of Backing, Monetary Economics
Famous quotes containing the words fiat and/or money:
“Then for the Style; Majestick and Divine,
It speaks no less than God in every Line:
Commanding words; whose Force is still the same
As the first Fiat that produc’d our Frame.”
—John Dryden (1631–1700)
“Listen to me, imbecile. If the Treasury is important, then human life is not. This is clear. All those who think like you ought to admit this reasoning and count their lives for nothing because they hold money for everything.”
—Albert Camus (1913–1960)