The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. There are distinct kinds of "gold standards". First, the gold specie standard is a system in which the monetary unit is associated with circulating gold coins, or with the unit of value defined in terms of one particular circulating gold coin in conjunction with subsidiary coinage made from a less valuable metal.
Similarly, the gold exchange standard typically does not involve the circulation of gold coins. Rather, it uses notes or coins made of silver or other metals, but where the authorities guarantee a fixed exchange rate with another country that is on the gold standard. This creates a de facto gold standard, in that the value of the silver coins has a fixed external value in terms of gold that is independent of the inherent silver value. Finally, the gold bullion standard is a system in which gold coins do not circulate, but in which the authorities have agreed to sell gold bullion on demand at a fixed price in exchange for circulating currency.
No country currently uses the gold standard as the basis of its monetary system, although several hold substantial gold reserves.
Read more about Gold Standard: Theory, Advocates of A Renewed Gold Standard, Gold As A Reserve Today
Famous quotes containing the words gold and/or standard:
“Daughter to that good Earl, once President
Of England’s Council and her Treasury,
Who lived in both, unstain’d with gold or fee,
And left them both, more in himself content.
Till the sad breaking of that Parliament
Broke him, as that dishonest victory
At Chaeronea, fatal to liberty,
Kill’d with report that old man eloquent;—”
—John Milton (1608–1674)
“If the Revolution has the right to destroy bridges and art monuments whenever necessary, it will stop still less from laying its hand on any tendency in art which, no matter how great its achievement in form, threatens to disintegrate the revolutionary environment or to arouse the internal forces of the Revolution, that is, the proletariat, the peasantry and the intelligentsia, to a hostile opposition to one another. Our standard is, clearly, political, imperative and intolerant.”
—Leon Trotsky (1879–1940)