Posted in Finance, Accounting and Economics Terms, Total Reads: 66
Definition: Gold Standard
The Gold Standard was an old practise by countries to value their currencies in with respect to the current price of gold in the market. This was practised in the late 1980s to the 1930s in many countries.
The monetary system followed by the countries played a vital role in the conversion of the currency rate in the lines of prices of gold at the defined period.One problem that most of the countries faced is that they had to maintain huge reserves of Gold in their economy in order to get the gold standard practise working which was not feasible otherwise.
Hence, there were various modifications that followed which finally led to the dumping of the Gold Standard in order to formulate currency conversation rates.