Gold standard

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.

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Gold standard. The gold standard is a monetary system that measures the relative value of a currency against a specific amount of gold.

It was developed in England in the early 18th century when the scientist Sir Isaac Newton was Master of the English Mint. By the late 19th century, the gold standard was used throughout the world.

The United States was on the gold standard until 1971, when it stopped redeeming its paper currency for gold.