Gold Standard
Gold Standard is the oldest monetary system where one unit of currency equals a specific amount of Gold. Gold Standard is the exchange system existed from 1870 to 1914 (till the start of first world war) in the majority countries of world. Gold Standard is the most important method of Fixed Exchange Rate. In the Gold Standard System, the value of all currencies is calculated based on Gold. It's exchange rate is determined according to the quantity of gold used to make each currency and fixed price. Every countries in the world accepted to change their currency to gold at fixed rate. It is because the currency can be independently converted to Gold. This simply and easily helped to change one currency to another currency. After the failure of Gold Standard, Gold Exchange Standard came into existence. According to Gold Exchange Standard, the security of currency can be measured to any currency based on gold.
Example of Gold Standard : 30 dollars = 1 Ounce of Gold
That is, Trader A trades a $300 business with Trader B and Trader B gives 10 ounce of gold to Trader A.
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