Money that (a) derives its value entirely from the mandate of the government, and (b) cannot be freely traded. Fiat money is not the same thing as floating currency, because if a floating currency is intrinsically worthless then its lack of worth will be reflected in the forex markets. Fiat money, on the other hand, does not require a disciplined monetary of fiscal policy on the part of the issuing authorities; exchange rates are fixed by decree, which means the state also controls supplies of hard (foreign) currency.
Examples of fiat money include the French revolutionary assignat and the Soviet-era ruble.
by abu yahya August 03, 2008
Money that is only money because some government says that it is.
There's no gold or silver backing greenbacks.
by octopod January 16, 2004
Money that is valueless, or that is backed by nothing, or by such a small amount of any tangible compared to its perceived value that its tangible value is not worth noting
$USD currency is fiat money.
by Jon Davis January 14, 2004