GOLD SPECIE STANDARD

This is when the standard of each gold coins were in circulation and debts of each country were if required payable on demand in gold coin or gold bullion at practically the same rates as those at which its standard gold coins were minted, The standard  circulation and could be freely  exported. The consequence was that gold passed freely from one gold standard country to another in conformity with the ebb and flow of trade and the prices of commodities tended to that point of equilibrium when a given quantity of gold could purchase the same quality and value of goods in every country of the world. This was the first gold standard prior to the first World War 1 maintained by the principal countries of the world.

GOLD BULLION EXCHANGE STANDARD-

       Under the this, such that is those that existed in first world countries like the Great Britain from 1925 to 1931, the internal currency, consisting not of gold coins but of notes  and token  coins can be exchanged from gold bullion at the central bank at a fixed rate. Gold is obtainable for export for the purpose of paying foreign debts but in bars not in coin. In so saying the value of the legal tender notes used for internal circulation bears a fixed relation to the value of gold.

GOLD EXCHANGE STANDARD-

        There are countries  using as currency either notes or silver coins and holding no reserves of gold may enact that notes or the silver coins shall for the purpose  of paying foreign debts to be convertible at fixed rates  into exchange on a   country which is either on gold specie or gold bullion standard. The currency of the gold exchange standard country is linked with the currency of the gold specie or gold bullion standard country which is thus linked with gold. To make sure the smooth working of this system, the gold exchange standard country must maintain in the country with its currency linked reserves of gold or its equivalent i.e. monetary rights gold exchange upon that country and other countries of gold exchange standards. The advantages of a gold exchange standard are that main reserves of a country on it can earn interest, which does not apply to a stock of gold.            The demerit is that if a country with which a gold exchange is linked leaves the gold bullion standard, the gold exchange reserves depreciates. Scandinavian states on the gold exchange standard experienced such badly depreciation in 1930, 31 when Britain left the gold bullion standard. Gold standards are now a thing of the past since the inception of the International monetary fund and the Exchange Equalization Arrangements. However, it is not as if gold is completely ruled out, but it is still of high interest because International monetary fund which was established as a result of the Breton woods Conference and European payments union, currency parities of member countries are expressed in terms of gold and payments have to be made in gold once countries reach a certain stage of indebtedness.

BIMETALLISM-

           This is a currency system consisting of two metals usually gold and silver. Both metals have equal facilities of coinage and the coins circulate side by side as a legal tender in a legally fixed ratio. The system was adopted by the Latin Monetary union headed by France in the year 1865 but it failed to work properly. Theoretically there was a case for bimetallism but in practice the difficulty was always to maintain the adopted was 15 of silver to me of gold and the market ratio of silver declined say to 16: I then silver was to operate and the silver coins would drive the gold coins out of the circulation. In spite of these however there was during the inter-war years the world wars 1&2, a strong movement headed by the United States -a great silver producing country for the universal adoption of a bimetallic system. It was urged that great advantages would accrue from the use of the two metals by broadening the metallic base of the world’s currency systems, secondly the use of silver would be increased by substituting silver coins for bank notes of low denominations, thirdly that modern methods of currency control would prevent the operation of Gresham’s law. There can never be wide scale adoption without international agreement.