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it money.
 
When a government issues banknotes, it decides on a valuable commodity on which to fix them, gold or silver, for example. It then fixes a stable value on the banknotes and sets them as a medium of exchange. The government can choose to maintain enough valuable commodities to let everyone with banknotes redeem it. The government can also choose to keep just enough valuable commodities to satisfy the small fraction of people who actually want to make the redemption. In this sense, banknotes are credit money because people can use them to redeem gold or silver.
 
In modern monetary systems, however, the central bank often issues money that is not backed by valuable commodity. The size of the money supply in these systems does not depend on the availability of valuable commodity or the obligation of the central bank to repay credit money with valuable commodity. This kind of money is known as fiat money and is the most ubiquitous form of money in most modern monetary systems.
 
Credit money can also refer to any claim on valuable commodity that is used as a medium of exchange instead of banknotes. Checks, IOUs and bonds that can be redeemed for banknotes are examples of this. Sometimes credit money has a maturity date, as in the case of checks where the bank pays the check recipient a certain amount of banknotes at maturity.
 
Fiat Money法定货币

Fiat money is the opposite of honest money. Fiat money is money that is declared to have value even if it does not. Honest money has value regardless of what people say. Gold and silver are often referred to as honest money and since they have been dug out of the ground at considerable expense, they do have value regardless. People will pay variable sums for them.
Fiat money is also known as paper money, or electronic money. Since there is nothing behind paper money but the obligation of a state to redeem it in more paper or electronic money, fiat money's ultimate worth is questionable at best. In fact, there is a history of states walking away from the face value of the fiat money that has been printed (created). But if one has it in one's possession, it is impossible to walk away from the value of gold and silver - and contrary to fiat money, they have an inherent quality.
Mainly an outgrowth of central banking, in the modern age, fiat money probably would not be attractive without state support. That's because fiat money, unlike fractional reserve money, has no inherent value. Fractional reserve banking, in fact, is a private market phenomenon in which private banks provide paper notes the face value of which adds up to more than the reserves held by the bank. There is a history of successful fractional reserve banking efforts within the private marketplace; however fiat money ALWAYS collapses, as it is impossible to issue a substance of value year after year and generation after generation that HAS no value.
In theUnited States, the world's largest and most dominant economy, the greenback became a fiat currency when President Richard Nixon broke the final link between gold and the dollar in 1971. He did this because the French were apparently threatening to redeem their dollars in gold - and either the US central bank and/or Treasury did not have enough gold to In any event, Nixon severed the dollar's relationship to gold and ever本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。