Representative Money

Representative money is a type of currency that has no intrinsic value itself but represents a claim on a commodity that can be redeemed. Historically, this often meant paper currency that could be exchanged for a specific amount of gold or silver, such as under the gold standard. Representative money differs from fiat money in that a physical commodity backs it, whereas fiat money derives its value from government decree and public trust.

Example

During the gold standard era, U.S. dollars were considered representative money because they could be exchanged for a fixed amount of gold upon request.