Business and Personal Finance Dictionary

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• COMMODITY-VALUED CURRENCY
  
  A currency is said to be valued by a commodity if its value is tied directly to the value of that commodity. For instance, under the gold bullion standard, the value of each currency was expressed in terms of the value of a fixed quantity of gold. There are only 3 ways of designing a currency system: fiat (i.e. without reference to anything else); valued by a commodity, when its value is expressed of terms of the value of that commodity (whether or not it is redeemable in that commodity--e.g.: Bretton Woods dollar-gold equivalence standard; airline miles); or backed by a commodity, when the currency is in fact a claim to a given quantity of that commodity (which typically requires having a stock of that commodity on hand to meet such requests).
  
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