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You're right about central banks, but this is not what being backed means. When a currency is backed by another asset, it means that the issuer promises to red
by lottin 5y ago
You're right about central banks, but this is not what being backed means. When a currency is backed by another asset, it means that the issuer promises to redeem the currency for a pre-determined quantity of the underlying asset, which is not the case of fiat currencies (or crypto-currencies for that matter).
- OscarCunningham 5y agoSure, but central banks do typically promise to hit an inflation target, which is similar in the sense that it's a promise for the money to have a certain value. If a bank bought and sold gold to make a currency hit an inflation target, would that be commodity money or fiat?
- lottin 5y agoGood point.