What are some examples of fiat money?

Well-known examples of fiat money include the US dollar, pound sterling, and the euro, with the US, UK and all European nations operating on a fiat-based currency system. It’s important to note, however, that many countries use a combination of currencies, including fiat and commodity money.

What is the difference between fiat money and commodity money?

The main difference between commodity and fiat money is that commodity money has an intrinsic value. In other words, it has a use and value outside of its use as money. For example, gold can can be used in jewellery as well as a money. So even if it wasn’t used as money, it has value.

What are the pros and cons of fiat money?

One of fiat money’s key strengths is it’s an asset that’s easy to control and predict – which is crucial in avoiding economic shocks, such as recession. Remember: governments themselves control fiat money, which gives them more breathing room in terms of supply and value than other forms of currency.

What is the difference between fiat money and representative money?

Both fiat and representative money are backed by something. Without any backing, they would be completely worthless. Fiat money is backed by a government, while representative money can be backed by different assets or financial instruments. 1 For example, a personal check is backed by the money in a bank account.