The Gold Standard
Many countries had accepted the Gold Standard as their monetary system during the last two decades of the nineteenth century.
Under this system, the parities of currencies were fixed in terms of gold. The currencies of the countries, which were on gold standards, could be exchanged freely and the rate varied depending upon the gold content of the currencies. This was also known as the Mint Parity Theory of exchange rates.
Gold Standard helped in maintaining the stability in exchange rates and correcting the disequilibria in their balance of payments on an automatic basis.
This system was in vogue till the outbreak of World War I. Several efforts went futile in reviving this system and the era of Gold Standard came to an end by late 1930s.
Many countries had accepted the Gold Standard as their monetary system during the last two decades of the nineteenth century.
Under this system, the parities of currencies were fixed in terms of gold. The currencies of the countries, which were on gold standards, could be exchanged freely and the rate varied depending upon the gold content of the currencies. This was also known as the Mint Parity Theory of exchange rates.
Gold Standard helped in maintaining the stability in exchange rates and correcting the disequilibria in their balance of payments on an automatic basis.
This system was in vogue till the outbreak of World War I. Several efforts went futile in reviving this system and the era of Gold Standard came to an end by late 1930s.