Fiat money
Etymology
“Fiat” is Latin for “let it be done,” the subjunctive of “fieri” — the same word behind “fiat lux,” “let there be light.” A fiat currency is money by decree. The world moved fully onto fiat money after 1971, when the United States ended the dollar’s convertibility to gold.
noun phrase · /FEE-aht MUH-nee/
Currency that has value only because a government declares it legal tender, not because it is backed by gold or any commodity.
What it names
The modern arrangement in which money is worth something purely by collective trust and decree, not intrinsic substance.
Example
A paper banknote is fiat money: the cotton and ink are nearly worthless, but everyone accepts it because the state says it settles debts.
Related idea
Fiat money rests on decree and trust; commodity money like gold coin carries value in its own substance, and legal tender is the narrower legal status that debts must accept it.