Monetary standard

Overall there can be two main kinds of monetary standards – metallic standards and paper standard.  1) METALLIC STANDARD Under metallic standard, the monetary unit is determined in terms of some metal like gold, silver, etc. Standard coins are made out of the metal. Standard coins are full-bodied legal tender and their value is equal to their intrinsic metallic worth. The important thing to note is that to be on a metallic standard a country must keep – (a) its monetary unit at a constant value in terms of the selected metal, and (b) its various types of money convertible into the selected metal at constant values. Metallic standards themselves can be of two types – monometallism and bimetallism. A] Monometallism :-  Also known as Single Standard, here only one metal is adopted as the standard currency/money. The monetary system is made up of and relies entirely on one metal, like say the gold standard or the silver standard. So coins are made up of one metal only.  This ...

  A monetary standard is  a set of institutions and rules governing the supply of money in an economy . These rules and institutions collectively constrain the production of money. Through its constraints on money creation, the standard indirectly acts on prices The term “monetary standard” refers to the monetary system of a country.  Prof. Halm defines monetary standard as the “principal method of regulating the quantity and the exchange value of standard money.” CHARACTERISTICS OF IDEAL MONETARY STANDARD A sound monetary standard or system should possess the following qualities. 1. Simplicity: The monetary system should be simple and easily understandable. A simple monetary system inspires public confidence. 2. Elasticity: A good monetary system should be elastic. It should be capable of changing the money supply according to the requirements of the economy. 3. Economical: The monetary system should be economical. It should not require heavy expenditure on its operation...