FIAT currency refers to any traditional or government-issued currency not backed by a commodity such as gold.
The gold standard supported government currencies such as the USD, but that system was abandoned in the late 1930s.
FIAT is derived from the Latin word “determined by authority,” which aligns with the central bank and government-issued currencies.
The phrase was more popularised with the rise of cryptocurrencies. Simply put, FIAT currencies are legal tenders issued and controlled by governments.
