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Definition

Gold Standard

From 1876 to 1913, exchange rates were dictated by the Gold Standard. Each currency was convertible into gold at a specified rate. Thus, the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold. Each country used gold to back its currency.When World war 1 began in 1914, the gold standard  was suspended.Some countries reverted to the gold standard in the 1920s but abandoned it as a result of banking panic in the United States and Europe during the Great Depression.


Gold standard is a fixed exchange rate regime under which a currency is directly convertible into gold.

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