Great Britain accidentally adopted a de facto gold standard in 1717 when Sir Isaac Newton, then-master of the Royal Mint, set the exchange rate of silver to gold too low, thus causing silver coins to go out of circulation. The shift to an international monetary system based on a gold standard reflected accident, network externalities, and path dependence. Historically, the silver standard and bimetallism have been more common than the gold standard. Many states nonetheless hold substantial gold reserves. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the late 1920s to 1932 as well as from 1944 until 1971 when the United States unilaterally terminated convertibility of the US dollar to gold, effectively ending the Bretton Woods system. These certificates were freely convertible into gold coins.Ī gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. Gold certificates were used as paper currency in the United States from 1882 to 1933. The coin to the left is Swedish and the one on the right is Danish.
Two golden 20 kr coins from the Scandinavian Monetary Union, which was based on a gold standard. Monetary system based on the value of gold
