What Is Gold Standard and Its 3 Different Types

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What Is Gold Standard and Its 3 Different Types
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• Many countries have been defining gold standard
  as a monetary system whereby the currency used is
  based on a fixed amount of (Au). In this monetary
  system, cash and deposits in the bank can be
  exchanged into gold and the price is fixed.

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• Up to now there are 3 common types of standard
  and they've been practised since the 1700s. These
  are known as the gold specie, gold bullion
  standards and gold exchange. To know a bit more
  about these three different standards a brief
  explanation is included below

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• Gold Specie. In this particular gold standard
  option, the currency unit has a direct connection
  with the circulated gold coins.

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• In other words, the unit of currency is
  connected to the unit of value of each different
  gold coin. Secondary coinage with lower value
  than gold uses the same rules as well. The
  presence of gold specie standard was detected in
  the era of medieval empires.

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• The Byzant (Greek) and the British West Indies
  are some of the gold standard examples. However,
  this type of standard is rather an applied system
  as it's not formally established. It origins from
  Spain and it's known as the doubloon. In 1873,
  the U.S. legally adopted the system and American
  Gold Eagle is used as unit.

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• Gold Exchange. This particular gold standard
  only involves the circulation of coins valued
  less than gold, for instance silver. The
  authorities tend to impose a fixed rate for gold
  exchange on countries that are using the gold
  standard.

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• Many countries choose to peg their currency
  units to the gold standard in the U.S. and U.K.
  For instance, the Japanese, Mexican and Filipino
  choose to exchange their silver to USD at the
  price of 0.50 per unit.

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• Gold Bullion. This type of gold standard sells
  gold bullion via fixed prices based on demand.
  This method of trading was first carried out by
  the Parliament of the British in 1925 whereby it
  resulted in the voidance of the gold specie
  standard.

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• In 1931, the U.K. government made a decision to
  banish the gold bullion standard on a temporary
  basis to curb the excessive flow of gold way past
  the Atlantic Ocean. The same year witnessed the
  ending of the gold standard.

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• The utilization of gold standard has brought
  about several advantages. One of them is that the
  power of determining the occurrence of inflation
  within the country is not totally given to the
  government. In other words, inflation can be
  curbed by preventing the issuance of excessive
  paper currency done by the government.

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• At the same time, the exchange rates will
  develop a fixed pattern whereby global economic
  uncertainties can be reduced at a great level.
  However, just like many other monetary systems,
  gold bullion standard has its own set of
  disadvantages as well.

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• It's believed that it might not be able to
  stabilize the economy during depressive financial
  condition as it might cause the monetary policy
  to become ineffective. The belief makes sense,
  and a lot of economists are afraid that their
  theory would come true. In gold standard the
  availability of ( Au ) is the sole determinant to
  the availability of money.