Question

A cheque is a fiat money. (State whether the statement is TRUE or FALSE)

Answer 1

Fiat money is a currency without intrinsic value that has been established as money, often by government regulation. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.[1] It was introduced as an alternative to commodity money and representative money. 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 (such a good is called a commodity). Representative money is similar to fiat money, but it represents a claim on a commodity (which can be redeemed to a greater or lesser extent).

Answer 2

The statement cheque is a fiat money is as follows:

• Physical money like coins and paper money, is fiat money. Cheque is representative money.
• Representative money and fiat money are backed by anything and government respectively.
• In a bank account, the money backs a personal check. There will be no value if the cheque gets bounced.
• Therefore, this is proved that a cheque is not fiat money.