A state-backed digital currency that is issued as part of the official money supply in an economy (parallel with fiat currency). Fiat digital currency allows a government to provide a highest degree of security and fostering trust in the digital ecosystem within a country and with the rest of the world. Additionally, it addresses the need for legal features to be used with confidence in payments.

A fiat digital currency embodies a connection between liability of a state and its physical fiat currency. Therefore, it is non-fungible (in the sense of series numbers like physical fiat currency), but provides more transparency and privacy in payments, in addition to its programmability, and ability to bring about better financial inclusion, improved regulatory control, and enhanced security and consumer protection.

It is also known as a crypto fiat currency.