Gold Standard

The gold standard is a monetary system in which a country’s currency is directly linked to a fixed quantity of gold. Under this system, paper money could be exchanged for gold at a set rate, helping ensure that the currency retained long-term stability and purchasing power. The gold standard was widely used in the 19th and early 20th centuries, but most countries gradually abandoned it. Gold convertibility was first suspended during wartime, and later most countries fully moved to fiat currency systems, notably after the US ended the dollar’s direct convertibility to gold in 1971.