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Fiat money is a type of government-issued currency that is not backed by a precious metal, such as gold or silver, nor by any other tangible asset or commodity. Fiat currency is typically designated by the issuing government to be legal tender , and is authorized by government regulation.
[1] [2] A more general definition is that a currency is a system of money in common use within a specific environment over time, especially for people in a nation state. [3] Under this definition, the British Pound sterling (£), euros (€), Japanese yen (¥), and U.S. dollars (US$) are examples of (government-issued) fiat currencies.
Since the suspension of the gold standard in 1931, sterling has been a fiat currency, with its value determined by its continued acceptance in the national and international economy. World War II In 1940, an agreement with the US pegged sterling to the US dollar at a rate of £1 = US$4.03.
Greenbacks were emergency paper currency issued by the United States during the American Civil War that were printed in green on the back. [1] They were in two forms: Demand Notes, issued in 1861–1862, [1] and United States Notes, issued in 1862–1865. [2]
The history of money is the development over time of systems for the exchange of goods and services.
By 1796 the issues had reached 45.5 billion francs, excluding counterfeits, and the Directoire issued Mandats, a currency in the form of land warrants to replace the assignats, although these too quickly failed and were received back by the state at a steep discount. [24] Napoleon opposed all forms of fiat currency.
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Currency money is money in full circulation that takes its value from the precious metal it contains, that is, its market value is (almost) the value of the metal it contains (apart from the Seigniorage or the minters' profit), though this is always overcompensated for in coins and banknotes from a country undergoing debasement.