Skip to Main Content
Handbook of Exchange Rates
book

Handbook of Exchange Rates

by Jessica James, Ian Marsh, Lucio Sarno
July 2012
Beginner content levelBeginner
856 pages
27h 22m
English
Wiley
Content preview from Handbook of Exchange Rates

5.2 A Brief History of Currency Regimes

Currency regimes, until recently, have relied on a link to a valuable commodity, usually gold or silver, to establish the value of a currency. While the monetary use of precious metals can be traced back to 2900 BC, this took the form of ingots whose value was based on weight (Eagleton and Williams, 2007, p. 16). Coinage seems to have emerged around 700–800 BC, when Lydian coins made of electrum (a naturally occurring mixture of gold and silver) were struck (Eagleton and Williams, 2007, p. 24). International exchange of currencies was normally based on their bullion value, whatever their value in tale (that is, their nominal value as officially declared). Exchange rates between currencies were thus relatively straightforward and stable—as long as countries linked their currency to the same precious metal and the currency was not “debased.” However, the classical gold standard period—when all the major powers linked their domestic currency's value to gold—lasted only from 1896 to 1914.

England was effectively on the gold standard starting in 1817, with silver coins becoming subsidiary currency whose value was established by fiat, not by their (lesser) bullion value (Chown, Chapter 7). However, during much of the nineteenth century, other European countries, the United States, Japan, and India variously had a silver standard or a bimetallic standard whereby both gold and silver coins were supposed to reflect their metallic content. However, ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Introduction to Foreign Exchange Rates, Second Edition

Introduction to Foreign Exchange Rates, Second Edition

Thomas J. O'Brien

Publisher Resources

ISBN: 9781118445778Purchase book