Fiat is a term that refers to government-issued currencies, such as the US dollar, the euro, or the Japanese yen. Fiat money is legal tender that is backed by the government that issues it, rather than being backed by a physical commodity such as gold or silver.

The value of fiat money is derived from the trust that individuals and markets have in the issuing government and in the stability of the currency. Fiat money is used as a medium of exchange and a store of value, and it is widely accepted as a form of payment for goods and services.

Fiat currencies have been in use for centuries, and they are the most common form of currency in use today. They are issued and controlled by central banks, which are responsible for regulating the supply of money in the economy and for implementing monetary policy.

Fiat currencies have played a significant role in the development of modern financial systems and economies, but they also have their critics, who argue that they are subject to inflation and that they can be manipulated by governments and central banks.

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