Gold Standard

Gold Standard, in economics, monetary system wherein all forms of legal tender may be converted, on demand, into fixed quantities of fine gold, as defined by law. Until the 19th century, most countries of the world maintained a bimetallic monetary system.


The widespread adoption of the gold standard during the second half of the 19th century was largely a result of the Industrial Revolution, which brought about a vast increase in the production of goods and widened the basis of world trade.


The countries that adopted the gold standard had three principal aims: to facilitate the settlement of international commercial and financial transactions; to establish stability in foreign exchange rates; and to maintain domestic monetary stability.


They believed these aims could best be accomplished by having a single standard of universal validity and relative stability; hence the gold standard is sometimes called the single gold standard.