Why is fiat money legal tender?

Currency notes and coins are known as fiat money. Currency notes and coins are legal tender. They do not have intrinsic value like silver or gold coins. Every currency note has a promise from the Governor of RBI that the person will have the purchasing power equal to the value printed on the currency note. You can read about the RBI – Know More About Reserve Bank of India in the given link.

Further readings:

  1. Bad Banks – Idea Proposed Due to COVID-19
  2. Cashless Economy in India – UPSC GS-III Notes

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