Fiat currency is a legal tender whose value is set by the government and issued by it, unsecured by any physical good or product. A fiat currency's value is determined by the credibility of its government. Fiat currencies are used by most countries for buying goods and services, investing, and saving. Fiat has replaced the gold standard and other commodity-based systems for determining the value of the legal tender.

Fiat currency is the opposite of commodity money in that the latter relies on the value of the material used to produce it, such as gold, whereas fiat money is essentially the money issued by the government, which is not related to physical commodities.

Fiat currency, like the dollar or euro, is money that a government has declared to be legal tender. Historically, these currencies were backed by gold and silver; however, as the world transitioned to a system of floating exchange rates in 1971, this practice faded away. Fiat currency is different from commodity-backed money because it exists only because the government says it does.