Gold standard

This is the name given to a system of money whereby the value of the currency is related to the value of a speicified amount of bullion (gold bullion that is).

It used to be the case that all currencies were valued based on gold bullion with the system introduced in 1821 in the UK.

However because it is based on the value of the gold bullion it means the exchange rates are fixed between currencies which was too limiting with countries experiencing different booms and difficulties at different times.

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