The gold standard is a monetary system with gold as its standard currency. Under the gold standard, or the value of each unit of currency is equivalent to a certain weight of gold (i.e., the gold content of the currency); when different countries use the gold standard, the exchange rate between countries is determined by the ratio of the gold content of their respective currencies - Mint Parity ) to decide. The gold standard became popular in the mid-19th century. In history, there have been three forms of gold standards: gold coin standard, gold nugget standard, and gold exchange standard. Among them, the gold coin standard is the most typical form. In a narrow sense, the gold standard refers to this currency system.

[Edit this paragraph] Forms of the gold standard

1. Gold Specie Standard

This is the earliest form of the gold standard monetary system, also Known as the classical or pure gold standard, it prevailed from 1880 to 1914. Free minting, free exchange and free import and export of gold are the three major characteristics of this monetary system. Under this system, governments of various countries stipulate the gold content of currencies in the form of laws. The comparison of the gold content of the currencies of the two countries is the mint parity that determines the basis of the exchange rate. Gold can be freely exported or imported into the country, and a coin-price flow mechanism is formed during the export and import process, which plays an automatic adjustment role in the exchange rate. The exchange rate under this system has a small fluctuation range due to the effect of mint parity and the limitation of gold delivery points.

After the outbreak of World War I in 1914, various countries issued banknotes that were not redeemable and prohibited the free export of gold, and the gold standard came to an end.

2. Gold Bullion Standard

This is a disguised gold standard that uses gold bullion for international settlement, also known as the gold bullion standard. Under this system, gold bullion is stored by the state as a reserve; the exchange relationship between various currencies in circulation and gold is restricted, and free exchange is no longer implemented. However, when necessary, banknotes can be transferred to the central bank of the country in a specified limited amount when necessary. Unlimited exchange for gold nuggets. It can be seen that this monetary system is actually a gold standard with restrictions.

3. Gold Exchange Standard

This is a system that maintains foreign exchange in countries with a gold bullion standard or a gold coin standard and allows the domestic currency to be exchanged for foreign exchange without restrictions. of the gold standard. Under this system, only bank notes are circulated in the country. Bank notes cannot be exchanged for gold. They can only be exchanged for gold bullion or the currency of countries that implement the gold standard. In addition to gold, international reserves also have a certain proportion of foreign exchange. Foreign exchange can only be exchanged for gold abroad. , gold is the last resort for payment. A country that implements a gold exchange standard must maintain a fixed ratio between its currency and the currency of another country that implements a gold bullion or gold coin standard, and maintain the stability of its currency value through unrestricted buying and selling of foreign exchange.

The two monetary systems, the gold bullion standard and the gold exchange standard, basically disappeared in the 1970s.

[Edit this paragraph] Basic characteristics of the gold standard

1. Gold coin standard

Use a certain amount of gold as the monetary unit to mint gold coins as the standard currency ;

Gold coins can be freely cast and melted, and have unlimited legal solvency, while limiting the casting and solvency of other coins;

Auxiliary coins and bank notes can be freely exchanged for gold coins or equivalent amounts. Gold;

Gold can freely enter and exit the country;

Gold is the only reserve fund.

The gold coin standard eliminates the shortcomings of price chaos and unstable currency circulation existing under the bimetallism system, ensures that currencies in circulation will not depreciate against the standard currency metal gold, and ensures the unification of the world market and foreign exchange The relative stability of the market is a relatively stable currency system.

2. Gold Nugget Standard and Gold Exchange Standard

The Gold Nugget Standard and the Gold Exchange Standard are two different systems that emerged after the stability factors of the gold standard were destroyed. A sound gold standard. Under these two systems, although gold is stipulated as the currency standard, they only stipulate the gold content of the currency unit, instead of minting gold coins and implementing the circulation of bank notes. The difference is that under the gold nugget standard system, bank notes can be exchanged for gold nuggets domestically according to the specified gold content, but there are restrictions on the amount and use (for example, the United Kingdom stipulated that it should be above 1,700 pounds in 1925, and France stipulated that it should be above 1,700 pounds in 1928. It can be exchanged for more than 215,000 francs), and gold is stored centrally in the national government. Under the gold exchange standard, bank notes are not exchanged for gold bullion in the country. They only stipulate the exchange ratio with the currency of the country that implements the gold standard. The bank notes are first exchanged for foreign exchange, then the foreign exchange is exchanged for gold, and the reserves are deposited in the country.

[Edit this paragraph] History of the implementation of the gold standard

Historically, since Britain took the lead in implementing the gold standard in 1816, until the First World War in 1914, the main Capitalist countries have all implemented the gold standard, and it is a typical gold standard - the gold coin standard.

After the outbreak of World War I in 1914, in order to raise huge military expenditures, various countries issued banknotes that were not redeemable and prohibited the free export of gold. The gold standard ended.

After the First World War, from 1924 to 1928, there was a relatively stable period in the capitalist world. The production of major capitalist countries successively returned to the level before the war, and some progress was made. develop. Countries attempted to restore the gold standard. However, as the basis for the circulation of gold coins had been weakened, it was impossible to return to a typical gold standard. At that time, except for the United States, most other countries could only implement the gold standard without gold coins in circulation. This was the gold bullion standard and the gold exchange standard.

The gold nugget standard and the gold exchange standard do not have a series of characteristics of the gold coin standard, so they are also called incomplete or incomplete gold standards. Under the impact of the world economic crisis from 1929 to 1933, this system was gradually abandoned by various countries, and they all implemented non-honorable credit currency systems.