Interest rates are a fundamental aspect of any economy, influencing how fiat currencies government-issued money not backed by a physical commodity like gold or silver—are valued and utilized. These rates play a crucial role in determining borrowing costs, savings growth, and overall economic activity.
Central banks set interest rates to regulate inflation, stabilize the economy, and encourage investment, making them a critical tool in modern monetary policy. Understanding how interest rates affect fiat currency dynamics is essential for anyone navigating personal finance, investments, or global markets.