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Yuan dynasty banknotes are the earliest known fiat money. Fiat money is a currency established as money by government regulation or law. The term derives from the Latin fiat (let it become, it will become) used in the sense of an order or decree. It differs from commodity money and representative money.
Convertible, inconvertible and representative money are forms of what economists call paper money. Another form of paper money is fiat money. Fiat money is typically the paper money of a country, such as the U.S. dollar or Japanese yen.A commodity such as gold or silver does not back the value of fiat money, which is subject to devaluation due to economic crises such as hyperinflation.iat money is typically the paper money of a country, such as the U.S. dollar or Japanese yen. A commodity such as gold or silver does not back the value of fiat money, which is subject to devaluation due to economic crises such as hyperinflation.