Fiat currency refers to a medium of exchange that is issued and controlled by a government. It has its own banking system and it is not backed by any traditional commodities including gold and silver.
A fiat currency’s value is underpinned by the strength of the government that issues it, not its worth in any commodities. It is based on the government’s national credit using future tax income as a reserve fund.
In the early 2000s, Zimbabwe decided to print its fiat money in response to the country’s economic problems. As a result, the country suffered in hyperinflation between 230 and 500 Billion percent.
Nowadays, almost all countries in the world issue their own form of fiat currency.