Chapter 15 Notes - Chapter 15 ECON 3110 Need for a Monetary...

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Chapter 15 ECON 3110
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Need for a Monetary Standard Types of Money: Commodity vs. Fiat Purposes of Money: Medium of Exchange Unit of Account Store of Value Medium of Payments Economic Policy Economic Expansion Increasing Economic Sovereignty Complicated Monetary Arrangements Rising Instability in the International Trade and Finance.
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Time Line of International Monetary Systems Ancient times 1880 1914 -18 1931 1940-45 1971 1979 2002 Gold Standard Return Bretton Woods General Floating to Gold System EMS EU W.W..I Depression Post W.W. II Growth Globalization W.W.II Oil Crisis
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The Gold Standard Gold Standard is NOT Gold-Backed Money It is the international monetary arrangement that was in place 1879-1914. Napoleonic Wars Need for seigniorage to finance war Inflation in Britain Coinage Act in 1816 National Gold Standard Germany opts for gold in 1870 Increasing demand for gold Discovery of large silver deposits Increasing supply of silver Fear of inflation in silver standard countries They stopped backing their currencies with silver by 1879.
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Rules of the Standard 1. Fix gold parity for national currencies 2. Free conversion of currencies into gold, and vice versa.
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