CHAPTER 2

MONETARY STANDARD
 Monetary Standard
A particular type or kind of standard money used
in the monetary system of a country and to which
other kinds of money related.
Types of Monetary Standard
• Commodity Standard
• Non-commodity Standard/Fiat Standard
 Commodity Standard
Is one in which the value or purchasing power of the
monetary unit kept equal to the value designated quantity
of a particular commodity or group of commodities.
 Types of Commodity Standard
Monometallic Standard
Bimetallic Standard
 Monometallic Standard
Silver Standard
Gold Standard
 Silver Standard
The silver standard is a monetary system in which the standard economic
unit of account is a fixed weight of silver.
 Gold Standard
• Is the monetary system in which the monetary unit is kept at par with a
fixed weight or value of gold.
 Bimetallic Standard
is a monetary system in which coins of two different
metals at a fixed legal ratio of weighs and fineness are
use as the monetary unit or standard.
Non-Commodity Standard/Fiat Standard

Is that kind of monetary system in which the value or

purchasing power of the monetary unit as not kept equal
to the value of a specific quantity of a particular
commodity or group of commodities.
Essential Characteristics of Fiat Standard

• A unit of fiat money is adopted as the standard unit of

value.
• The standard fiat money is made full legal tender.
• All credit money issued by the government and the
central bank as well as all other legal tender money are
redeemable or exchangeable in the standard fiat money.
 TYPES OF FIAT STANDARD
• Utopian Paper Standard
• Involuntary Paper Standard
• Managed Currency Standard