World currency under the gold standard19th century, both gold and silver are world currencies. Later, with the universal establishment of the gold standard, gold gained a dominant position.
Gold acts as an international currency. Under the gold standard, gold not only plays the role of national currency in the national economy, but also plays the role of world currency in international relations. The balance of payments is offset by gold, and only gold constitutes the international reserve currency. Gold can be freely imported and exported, and a country's currency can be freely exchanged with gold at a fixed price.
The international circulation of money is different from the domestic circulation. Domestic circulation is a matter within the sovereignty of a country, and the organizational form of currency circulation is stipulated by the laws of that country. Price standards, coin forms, tokens and value symbols are all stipulated by the state according to its own economic situation and traditional habits. In international circulation, money appears in its original form, that is, in the form of gold bars. In domestic circulation, coins are circulated according to their face value. Worn coins (within the prescribed limits) can be used as valuable coins. In the world market, its nominal value is completely meaningless, but it must be calculated and used in the form of gold bars according to its actual weight and color. As for the paper money that cannot be cashed, it has no value in itself and is invalid in the world market.
The exchange and exchange rate of gold came into being with the gold serving as the world currency, the exchange and exchange rate of money and the international circulation of gold. Currency exchange has become a necessary factor in international trade. In order to make payment in foreign trade, it is necessary to exchange foreign currency for local currency, or exchange gold as the world currency for various currencies. Because money has lost its locality as a world currency, it all boils down to a certain amount of gold, so the currency of one country can be expressed by the currency of another country. Based on the ratio of mutual gold content, currencies of various countries form a certain exchange rate, that is, currency exchange rate. The stability of a country's currency exchange rate against gold and other countries' currencies is one of the important conditions for the normal development of international trade. To this end, it is required that the currencies of various countries maintain stable parity with the world currencies and be freely convertible, that is, local currencies can be exchanged for a certain amount of gold at any time.
International circulation of gold The world currency is paid between countries, which causes the international circulation of gold. With the change of balance of payments and exchange rate, it is constantly transferred from one country to another. This flow is spontaneous and depends on the situation in the international political and economic field and the foreign political and economic ties of various countries. The former reflects and is influenced by the latter. However, the international circulation of gold as a world currency is different from its nature as a commodity flowing between countries. For example, when a gold producer sells its gold abroad, it is exported as a commodity, not as a world currency.
In order to realize the international circulation of gold, every country must maintain a certain amount of gold reserves. A country's gold reserve is not only its world currency reserve, but also its domestic circulation and bank notes cash reserve. The above two functions of gold reserve are contradictory. When it is used in domestic circulation, it will affect its function as a world currency reserve. When it is used in international circulation, it will affect the function of its domestic reserves. When the capitalist countries stop the domestic circulation of gold, the gold reserve only performs the function of the world currency reserve.
The mechanism of gold regulating exchange rate and economy Under the gold standard system, gold, as a world currency, exports and imports, plays a spontaneous role in regulating exchange rate. This mechanism keeps the fluctuation of exchange rate within a certain range. Because the local currency can be freely exchanged for gold at a fixed price, gold can be freely imported and exported. When the exchange rate rises to a certain extent, the cost of purchasing foreign exchange exceeds the cost of exporting gold (equal to the price of gold plus freight), people will directly export gold for external payment instead of buying foreign exchange; On the contrary, the exchange rate decline will not be too low. Therefore, although the exchange rate fluctuates, it can remain relatively stable.
The import and export of gold will also have an impact on the domestic economy and foreign economic ties. Gold reserve is the pillar of the whole monetary credit system. When gold exports reduce domestic gold reserves to a certain extent, in order to prevent gold from continuing to lose, the monetary authorities will raise interest rates and shrink credit, thus slowing down or even declining economic growth and reducing commodity input and external payment. On the contrary, the inflow of gold and the increase of gold reserves will lead to the decline of interest rates and the expansion of credit.
After the collapse of the gold standard in the imperialist era, the gold standard tends to collapse, gold withdraws from domestic circulation, and the credit currency circulating in China is completely unfulfilled.
References:
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