Fiat money

The idea that anything can be money if we all just believe hard enough in it, has been very popular among some regimes and politicians. Yes, of course, anything can be used as money, just like anything can be used as toilet paper, but choices have consequences. — Saifedean Ammous. 

The word "Fiat" originates in Latin, meaning decree, order.

Fiat money is any currency which use is privileged by state laws that provide a Central Bank the exclusivity of its issuance, and that create barriers to the adoption of other monies (e.g. the US dollar or the euro).  

Examples of legal privileges: 

-Anti-counterfeit laws establish a monopoly for its production that allows the Central Bank to extract seigniorage: the economic value that results from the difference between its purchasing power and its production cost.

-Anti-money laundering laws establish restrictions to the use of money that is not controlled by a list of accepted banks. 

-Mandatory exchange laws have the goal of guaranteeing a privileged distribution when it is first introduced, like the mandatory exchange of gold (the previous generalized form of money) for US dollar in 1933.

-Legal tender laws: recognize a specific fiat currency to be valid for extinguishing any debt when offered ("tendered"), although in some countries is possible to establish specific agreements to the contrary. Legal tender status also implies that it is the Unit of Account used by official entities to calculate, pay and require payments. It incentivizes its adoption and smooths its distribution.