Types of Money
- Fiat money is a currency established as money by government regulation or law. It differs from commodity money and representative money.
- Demonetised currency are not fiat money as they are not legal tender
- Commodity money is created from a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange,
- while representative money simply represents a claim on such a good.
- Fiat Money don’t have intrinsic value and are also called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transactions.
- Cheques can be refused by anyone as a mode of payment. Hence they are not legal tenders/fiat money
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