Fiat Money

Fiat money is a term used for paper currency such as we have in Canada. It has been made legal tender by law or fiat.

This money is not backed by gold or silver and it might not be redeemable in coin. This is commonly done and the value of fiat money is based on the performance of the economy of the country.

You will hear of the value of the dollar for different countries and it does tie into the perception of the stability of that country's economy.