Wikipedia:Today's featured article/January 21, 2005

The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold. When several nations are using such fixed unit of account then the rates of exchange among national currencies effectively becomes fixed. The gold standard can also be viewed as a monetary system in which changes in the supply and demand of gold determine the value of goods and services in relation to their supply and demand. Because of its rarity and durability, gold has long been used as a means of payment. The exact nature of the evolution of money varies significantly across time and place, though it is believed by historians that gold's high value for its utility, density, resistance to corrosion, uniformity, and easy divisibility made it useful both as a store of value and as a unit of account for stored value of other kinds. When used as part of a hard-money system, the function of paper currency is to reduce the danger of transporting gold, reduce the possibility of debasement of coins, and avoid the reduction in circulating medium to hoarding and losses. (more...)

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