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Fiat money refers to a currency that is issued by a government or central bank and is not backed by a physical asset, such as gold or silver. The value of fiat money is derived from the stability and credibility of the issuing authority, as well as the supply and demand dynamics of the market.

Unlike commodity money, which has intrinsic value, the value of fiat money is largely based on the trust and confidence that individuals and institutions place in the currency and the stability of the economy in which it is used. Most of the world's major currencies, including the US dollar, Euro, and Japanese yen, are examples of fiat money.

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