Gold standard

:This article is on the monetary principle. For gold standard in diagnostic testing, see gold standard (test).

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The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold and currency issuers guarantee, under specified rules, to redeem notes in that amount of gold. Nations that employ such a fixed unit of account, and which will redeem their notes to other nations in gold, in principle, share a fixed currency relationship. The intent is to create a system that is resistant to runaway credit and debt expansion, and to enforce a system where currency cannot be created by government fiat, and will, therefore be safe as a store of wealth against inflation. This is intended to remove currency uncertainty, keep the credit of the issuing monetary authority sound, and encourage lending.

Related Topics:
Gold - Standard - Monetary system - Economic - Unit of account

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The use of gold as a monetary standard has a long and varied history, from the period of time when coinage was the primary means for regulating money supply, all the way through the 20th century, where it was used to regulate international trade flows. Currently the gold standard, despite having advocates, has fallen out of use in almost all nations.

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