Fiat currency is legal tender issued by a national government, such as the US dollar, euro, or British pound. This form of currency is recognized as legal tender within the borders of the issuing country and is accepted as a medium of exchange for commercial transactions. Fiat currency is not backed by any tangible asset such as gold, and its value is determined by the market and the monetary policies of the issuing country. Most financial activities such as investments, loans, and commercial transactions are based on the use of fiat currency.