The International Gold Standard and the Multilateral Credit and Settlement System

Abstract

The international gold standard was the first clear instance of an organized international monetary and financial system. However, it was not from the beginning designed as such. This ‘universality’ resulted from the adoption by many countries of the gold standard as their domestic monetary system. In this respect, it is remarkably different from the IMF, which from the beginning was meant to be an international monetary and financial system, albeit an artificial one. Moreover, the international gold standard system was in fact a system based upon the pound sterling, in other words, a British Pound Standard. This, as is well known, arose from the character of Britain’s economy and its status in the world. Its institution owed its existence, however, to the great development and perfection of a foreign exchange system. Already in the nineteenth century and thereafter, Britain was making remarkable progress in the field of foreign exchange which, together with confidence in the stabilized character of the pound backed by gold, prepared the ground for its assumption of the role of an international currency.¹