gold standard


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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.

Gold Standard

A system whereby a currency is linked to the value of gold. That is, one would be able to exchange one unit of the currency for so many ounces of gold on demand. The gold standard makes monetary policy independent from policymaker decisions. Many currencies have been linked to gold over the years, most recently under the Bretton Woods System. The gold standard reduces the likelihood of inflation, but tends to cause higher interest rates and renders a country less able to pursue full employment. The gold standard contrasts with fiat money. See also: Cross of Gold, Silver Standard.

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.

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.

gold standard

an INTERNATIONAL MONETARY SYSTEM in which GOLD forms the basis of countries’ domestic MONEY SUPPLY and is used to finance INTERNATIONAL TRADE and BALANCE OF PAYMENTS deficits.

Under the gold standard, EXCHANGE RATES were rigidly fixed in terms of gold. (The gold standard was widely adopted in the 19th century and operated down to the early 1930s.) In theory, the gold standard provided an automatic ADJUSTMENT MECHANISM for eliminating payments imbalances between countries: deficits were financed by outward gold transfers that reduced the domestic MONEY SUPPLY. This in turn deflated (see DEFLATION) the domestic price level, making IMPORTS relatively more expensive and EXPORTS relatively cheaper, thereby reducing the volume of imports and increasing the volume of exports. Surpluses were financed by inward gold transfers, which increased the domestic money supply. This in turn inflated (see INFLATION) the domestic price level, making imports relatively cheaper and exports relatively more expensive, resulting in a fall in the volume of exports and an increase in the volume of imports. In this way, both deficits and surpluses were removed and BALANCE OF PAYMENTS EQUILIBRIUM restored. In practice, however, countries found that a combination of rigidly fixed exchange rates and the complete subordination of domestic economic policy to the external situation was too onerous and opted for more flexible arrangements. See FIXED EXCHANGE RATE SYSTEM, INTERNATIONAL MONETARY FUND.

References in periodicals archive ?
Classical Gold Standard (January 1879 to June 1914): The United States resumed converting dollars into gold in 1879 and, in so doing, joined the gold standard.
To properly assess the consensus view on the major problems of the gold standard that Bernanke (2012a; 2012b) surveys, it is first necessary to define the gold standard and its practical application.
Results Eleven of the twelve experts agreed that clinical diagnosis can be used as a gold standard for VFE.
These authors also seem to understate the extent to which the Fed and other central banks' deliberate management of the gold-exchange standard prevented monetary adjustment in the period 1929-33 from resembling the pattern of equilibrium typical of the classical gold standard. Indeed, none of the "gold standard" critics specifies the attributes of a true--classical--gold standard.
Writings on the classical gold standard are sprinkled with references to the "ethos" of that standard (e.g., Eichengreen 1992: 22) or to the "laissez-faire ethic" or "metallist norms" that held it in place (Gallarotti 1995: 7, 28).
AkzoNobel has announced the issue of more than 126,000 carbon credits worth more than $500,000--the first to be awarded under the company's landmark scheme for the shipping industry which was developed in conjunction with the Gold Standard Foundation and the Fremco Group.
The Gold Standard Award for Issues Management and Crisis Communications winner trophy was given to Meralco for its customer-centric and empowering campaign during the summer months of 2015 when power supply shortfall in the Luzon grid was imminent.
In each case, our Gold Standard prevails," Florence reveals.
Advanced stage gold exploration company Gold Standard Ventures (TSX VENTURE:GSV) (NYSE MKT:GSV) announced on Friday the departure of David M.
For the fifth consecutive year, Merchants Fleet Management, Hooksett, has earned the CEO Cancer Gold Standard accreditation for maintaining a strong commitment to the health of its employees.
Pachymetry and Intraocular Pressure Measurement by Corneal Visualization Scheimpflug Technology (Corvis ST): A Clinical Comparison to the Gold Standard. Ophthalmologe.
The gold standard sets out the Sharia rules for trading and transacting in the metal whereby the latter joins equities, real estate, Islamic bonds (sukuk) and insurance (takaful) as vehicles approved for Islamic finance.