Economy 31-10-2018

The gold standard as a historical endorsement of the world economy

The world economy bases its monetary backing with the sustainability of metals, so historically they have opted for gold, silver or a combination of both.

The currencies of the world are supported by the gold standard , a system that guarantees the value of the monetary unit, and offers a backing that formalizes the granting of notes to the possessor of the amount of gold that is immersed in them.

The gold standard is a historical financial denomination, but it also accepts that the paper money is weighed by another value metal such as silver , as long as it certifies that the issuer responds to the commercial value of the currency.

This modality was known as a bimetallic pattern in which gold and silver coexisted as support for the currenciesof certain nations.

Likewise, the producing and issuing countries of the currencies must adhere to this system of support based on convertibility, in which a quantity of banknotes can be exchanged for their equivalent in gold.

In 1971, the sustainability of gold considerably reduced its effectiveness as an economic guarantor, so the dollar became the substitute for protection of the world currency .

In this sense, some governments of the world have turned to reinforce the support in gold , as a priority to their local currency over the US dollar.

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