Gold has always been highly valued by mankind due to a number of its properties.. It became in demand in monetary circulation at first as an independent form of money., and then as a base for issuing paper banknotes. Despite the liquidation in the 70s. XX century gold standard monetary system (Bretton Woods system), metal continues to maintain a stable position in the world. It is no coincidence that international banking standards Basel III, which are scheduled for implementation 2022 G., classify gold as a first class asset.
The essence of the gold standard
Gold has a number of specific properties, making it convenient to use as money:
- recognized value;
- significant cost of small volumes;
- durability;
- convenience for coin production;
- the optimal amount of reserves in nature.
The features of gold led to its use for payments and storage of funds in the ancient world.. Gold bars were used as money in Egypt, Assyria and other countries. Then came the time for gold coins. Their first samples were minted in Lydia for over 2,5 thousand. years ago. During the period of metallic money, silver and copper circulated in parallel with gold., of lesser value.
With the development of the economy and its globalization, the direct use of gold coins began to be combined with the circulation of paper money., which are guaranteed to be exchanged for gold in a certain proportion. This was facilitated by:
- problems with the transportation of large volumes of gold;
- danger of counterfeiting;
- wear of gold coins.
Gradually, paper money began to displace gold coins from circulation.. This phenomenon obeys a pattern, at which money of better quality will be squeezed out of circulation by lower quality money, — Gresham's law.
Gold standard in Russia
There were two attempts in Russia to introduce a gold standard for the ruble.
The first of them was committed by the Minister of Finance Sergei Witte in 1895–1897.. The main features of his reform:
- open circulation gold coins;
- fixed exchange rate of paper credit notes for gold;
- The State Bank was given the right to conduct operations with gold coins.
The result of the reform was an increase in confidence in the ruble, inflow of foreign investments and strengthening discipline in the field of public finances. The gold standard of Sergei Witte successfully survived the first revolution of 1905-1907. and the Russo-Japanese War. Stopped in 1914 G., when the government launched a printing press to cover military spending.
The second reform took place in 1922-1924. under the leadership of the Soviet Minister of Finance Grigory Sokolnikov. In the course of the reform, a new monetary unit, the chervonets, was put into circulation.. Some of them were issued in the form of gold coins., equated to the pre-revolutionary gold ten-ruble coin, and part - in the form of banknotes, on which was written, what one gold piece contains 7,74 gram of gold. The main area of application of the chervonets was foreign trade operations.. The collapse of the NEP led to the cessation of the second attempt to introduce a gold currency standard in the country.
History of the gold standard in the UK and the US
In the UK, the gold standard was introduced in 1816 G. Sovereign coin in circulation, Including 7,32 gram of pure gold, equal to one pound sterling. IN 1871 G. the coin began to be minted outside of Britain: originally in Sydney, in Australia, and later in other countries of the British Empire. IN 1914 G. the gold standard has been phased out, because it limited the ability to issue paper money to finance military spending. In 1925–1931. an attempt was made to restore the gold standard, but it was allowed to convert banknotes into gold bars, not coins.
In the United States, the gold standard was established in 1900 G. The dollar was equal to 1,505 gram of gold. IN 1933 G. by Franklin Roosevelt's decree, this attitude was changed: dollar was equal to 0,888 my gram is gold. This ratio was valid until 1968 G. Richard Nixon ended the gold standard in the United States 1971 G., when he announced the termination of the guaranteed convertibility of the dollar into gold.
Rejection of the gold standard
IN 1944 G. an agreement was adopted on the basic principles of post-war monetary policy (Bretton Woods system). According to them courses currencies of most countries were fixed against the dollar, for which conversion into gold was guaranteed. The basis of international exchange rates was the dollar system: the dollar was backed by gold.
Despite all the advantages of the gold exchange standard system: steadiness, responsibility and predictability of exchange rates, it limited the flexibility and scope of monetary policy for central banks. The result was its liquidation in 1971–1975.. and implementation with 1976 G. Jamaican system, based on free exchange rates and the decoupling of money from the gold content.
Despite the abolition of the gold standard, gold itself as an investment element retained its value. It amounts to 25% in the international reserves of the Central Bank of the Russian Federation. In connection with the policy of printing money, conducted by the Democratic administration of US President Joe Biden and other countries, the attractiveness of gold will increase. We have already written about the features of investing in this precious metal..
