The currency is freely convertible at home or abroad into a fixed amount of gold per unit of currency. Gold standard, monetary system in which the standard unit of currency is a fixed quantity of gold or is kept at the value of a fixed quantity of gold. The gold standard maintained fixed exchange rates that were seen as desirable because they reduced the risk when trading with other countries. Countries quickly returned to a modified gold standard after the war, including the United States in 1919. The base of the monetary system was a gold-coin (gold) standard: gold … No country currently backs its currency with gold, but many have in the past, incl… By signing up for this email, you are agreeing to news, offers, and information from Encyclopaedia Britannica. By signing up for this email, you are agreeing to news, offers, and information from Encyclopaedia Britannica. The requirement of a fixed rate of exchange for the reserve currency has the effect of limiting the freedom of the reserve-currency country’s monetary policy to solve domestic economic problems. gold-exchange standard synonyms, gold-exchange standard pronunciation, gold-exchange standard translation, English dictionary definition of gold-exchange standard. Under the gold…, …European governments went off the gold standard and devalued their currencies, thus destroying the exchange system, with devastating effects upon trade. For instance, a standard economic unit is tied to a fixed weight of gold. Encyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree.... international payment and exchange: The gold standard. Be on the lookout for your Britannica newsletter to get trusted stories delivered right to your inbox. Instead of money being backed directly by gold, central banks issued liabilities against foreign currency assets (mostly U.S. dollars under Bretton Woods) that were in turn backed by gold. There is no need to keep a surplus reserve of gold in this case. Gold-exchange standard, monetary system under which a nation’s currency may be converted into bills of exchange drawn on a country whose currency is convertible into gold at a stable rate of exchange. But the gold exchange standard was causing deflation and unemployment to run rampant in the world economy, and so countries began leaving the gold standard en masse by the 1930s as the Great Depression reached its peak. The Features of the Gold Standard and the Gold Exchange Standard The first world monetary system was the Paris monetary system. Most nations abandoned the gold standard as the basis of their monetary systems at some point in the 20th century, although many still hold substantial gold reserves. Currencies were exchanged at a fixed price into the currency of another country (usually the British pound sterling) that was itself convertible…. Britain stopped using the gold standard in 1931 and the U.S. followed suit in 1933 and abandoned the remnants of the system in 1973. In this case, money is the economic unit and its value is determined by the value of gold. With the great depression, the stage was set for the abandonment of this monetary standard. Gold-exchange standard definition is - a monetary standard under which gold does not circulate domestically and international debts are settled primarily in currency of nations that maintain a gold and especially a gold bullion standard. To enable Standard CAL features for a user, the user must be licensed with the Standard CAL. Define gold-exchange standard. For example, paper notes can be part of a gold standard if they represent a claim to gold. 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