What is fiat money?

"Fiat money is similar to representative money except it cannot be
redeemed for a commodity, such as gold or silver. The Federal Reserve
notes we use today are an example of fiat money."

Federal Reserve Bank of Minneapolis


"The definition of money has varied. For centuries physical
commodities, most commonly silver or gold, served as money. Later,
when paper money and checkable deposits were introduced, they were
convertible into commodity money. The abandonment of convertibility of
money into a commodity since August 15, 1971, when President Nixon
discontinued converting U.S. dollars into gold at $35 per ounce, has
made the U.S. and other countries' monies into FIAT MONEY?money that
national monetary authorities have the power to issue without legal
constraints."

Anna Schwartz, 1987


"Central bankers' success, however, in containing inflation during the
past two decades raises hopes that FIAT MONEY can be managed in a
responsible way. This has been the case in the United States, and the
dollar, despite many challenges to its status, remains the principal
international currency.

If the evident recent success of FIAT MONEY regimes falters, we may
have to go back to seashells or oxen as our medium of exchange. In
that unlikely event, I trust, the discount window of the Federal
Reserve Bank of New York will have an adequate inventory of oxen."

Greenspan, 2002


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