Gold standard

Definition

The gold standard was a monetary system where the value of a country's currency was directly linked to a fixed amount of gold. It meant that paper money could be exchanged for gold at a predetermined rate.

Related terms

Fiat money: Currency that has value because the government declares it as legal tender.

Inflation: A general increase in prices and fall in the purchasing power of money.

Central bank: A financial institution responsible for managing a country's money supply and controlling interest rates.