Did you know? Fiat currency

Most of the world’s money has value not because it is backed by anything tangible, but because governments decree that it does. This is the essence of a fiat currency — money created by order (fiat in Latin) rather than by convertibility into gold or another asset. Since the 1970s, when the United States ended the dollar’s link to gold, all major currencies have operated on this system.

Fiat currencies rely on confidence: in the government that issues them, the central bank that manages them, and the economy that sustains their demand. When that confidence weakens — through inflation, excessive borrowing or political instability — the currency’s value can quickly erode.

The recent surge in the gold price and interest in digital or alternative reserve assets reflect growing unease with this model. As debt mounts and money creation expands, investors are once again asking whether value defined purely by decree can endure indefinitely.