|
An informal international exchange rate and payment system lasting roughly from 1870 to the beginning of World War II under which each country committed to exchange its currency for a specific quantity of gold. This agreement caused exchange rates to remain fixed for extended time periods. Commitment to the gold standard required countries to maintain gold reserves. To discourage investors from converting currencies into gold, countries had to deflate their currencies during periods of trade deficits and inflate their currencies during periods of trade surpluses.
|
