The gold standard

The gold standard was a currency exchange rate system that existed in the late 1800s to 1931. The gold standard was an exchange rate system of fixed exchange rates.

All the countries that participated in the gold standard had fixed exchange rates against each other. All national banks in the system of the gold standard guaranteed that the currency could be exchanged for gold.

To correct exchange rate differences between different currencies, gold was transported between countries. The system of the gold standard was discontinued in 1931 because of hyperinflation and depression.