Finance
What is The gold standard?
The gold standard was a monetary system where a country's money was directly backed by gold, and could be exchanged for a fixed amount of it. It limited how much money governments could print, but most nations abandoned it in the 20th century.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains the gold standard.
Key things to understand
- 1Currency was backed by, and convertible to, gold.
- 2It fixed the value of money to a set amount of gold.
- 3It limited how much money a government could create.
- 4Most countries abandoned it during the 20th century.
Frequently asked questions
- What was the gold standard?
- A system where money was backed by gold and could be exchanged for a fixed amount of it.
- Why did countries abandon the gold standard?
- It limited flexibility to respond to crises, so nations moved to currencies not tied to gold.
- What replaced the gold standard?
- Fiat money — currency whose value comes from government backing and trust, not a physical commodity.