A currency created "by fiat" means it's created without backing.
"A novelty of the 20th century was the issue of fiat currencies by governments. ("Fiat" means not backed by any reserve commodity, as the gold- and silver-based currencies of previous centuries were)." [1]
"A novelty of the 20th century was the issue of fiat currencies by governments. ("Fiat" means not backed by any reserve commodity, as the gold- and silver-based currencies of previous centuries were)." [1]
[1] https://nakamotoinstitute.org/shelling-out/