gold standard

Gold Standard

A monetary system in which a country's currency unit is freely convertible into fixed amounts of gold.

Notes:

The gold standard has lost its popularity. The U.K. was taken off in 1931, and the U.S. was taken off in 1971.

See also: Bullion, Economy, Fiat Money, Fool's Gold

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Gold standard

An international monetary system in which currencies are defined in terms of their gold content, and payment imbalances between countries are settled in gold. It was in effect from about 1870 to 1914.

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gold standard

A monetary system under which a country's money is defined in terms of gold and convertible into a fixed quantity of gold. A gold standard effectively takes monetary policy out of the hands of government policymakers. While use of the gold standard reduces the likelihood of inflation, the accompanying inability to pursue other economic goals, such as full employment or reduced interest rates, has resulted in the gold standard's fall from favor.