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Fiat money is not a new idea. Some European historians recognize the first use of fiat money in Europe resulting from gold and silver smiths issuing their customers receipts for gold or silver left in their care. The receipts were commands over that gold and silver, and began to trade as simply as the commodity itself, to the extent that the parties to the transaction knew of the smith and the note bearer. This trade in receipts dates back to the mid-fifteenth century. As, in this case the value of money is based on some mutual trust among the principles to these transactions.
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solution of central problem of an economy
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