Did you know that the word "fiduciary" comes from the Latin fiducia, meaning "trust' ? Unlike the gold standard system that prevailed until the 20th century, where each note could theoretically be exchanged for a precise weight of precious metal, modern money is called "fiat" (from the Latin "let it be done").
Its value comes not from its material composition but from the state decree declaring it "legal tender" and from users' confidence in its ability to purchase goods. If this confidence evaporates, the currency loses all interest, as we see during episodes of hyperinflation where banknotes end up being used as fuel.
Fiat money allows central banks to regulate the economy flexibly, adjusting the amount of money in circulation as needed. It is the foundation of modern finance, based on an invisible social contract but essential to the stability of global trade.
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