Legal Tender Money: It means money under law of land. It is money issues by monetary authority or the government which can not be refused by any person in payment for transactions. Government issues an order describing what is money which becomes legal tender money. Everybody is bound to accept it in exchange for goods and services and in discharge of debts. No one can refuse to accept it because non-acceptance is an offence.
Currency is legal tender money which cannot be refused in payment for transactions. Fiat Money: Fiat money is money with no intrinsic value. It is that type of paper money which is inconvertible. It circulates in the country on the fiat (I.e. command) of the state. Fiat Money is generally created and issued by the government at the time of crisis like war or emergency. Since it is issued, without any backing of gold, silver or other reserves, therefore, it is not convertible into anything than itself.
