Monetary Standard

The economy of a country largely depends on its monetary standards. Therefore monetary standard can be defined as the money's value of a country. Some of the monetary standards in use are described below:

Mono Metalism

When only metal, gold or silver, is adopted as a standard of value, the system is known as Mono Metalism. If the standard metal is gold, it is known as 'Gold Standard'. If it is silver, it is known as 'Silver Standard'.

Bi-Metalism

When both gold and silver are adopted as standards of value and are used for coinage and standard money, the system is called Bi-Metalism. The coins of one metal are convertible into the coins of the other metal at the fixed rate and coins of both the metals are recognized as unlimited legal tender. This system has been abandoned by the countries because a fixed ration between the coins could not be maintained.

The Limping Standard

When both the metals full tender, but one (generally silver) is not freely minted, the system is known as Limping Standards.

Gold Currency Standard

Under this standard, gold coins are into actual circulation. Currency notes are convertible into gold coins. The contents of the gold coins are fixed by law and the value of the coins and the fixed amount of gold are kept in parity. This system is very expensive.

Gold Bullion Standard

Under this standard, it is guaranteed that the currency notes will be convertible into gold coins at a fixed rate.

Gold Exchange Standard

Under this system the currency of a country is not directly linked to gold, but is indirectly governed by it through the medium of the currency of some other country which has a direct gold standard and by free purchase and sale of gold, the rate of exchange is kept near about the fixed parity. Gold coins and bullion are not available for internal transactions, but for making the payments for foreign countries.