ELI5 mode
Fiat money is currency that a government declares as legal tender, gaining value not from physical commodities like gold but solely from public faith and official decree. This system enables governments to control money supply and respond to economic crises more flexibly, though it risks inflation if overprinted. In modern global finance, fiat money underpins most economies, from the US dollar to the euro, making it a cornerstone of contemporary monetary policy.
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