gold standard---Currencies used to have a fractional amount of gold on-hand to serve as
reserves in order to keep the global currencies stable, but now there is no longer a gold standard.
The crew has “fiat” currencies instead, and bank reserves are just cash
on-hand, which must equal a fraction of the outstanding loans. Dangerously low
reserves were seen as one cause of the Great Recession. The Basel Accords address capital
requirements for banks. Exchange rates are visible in terms of one currency relative to another,
rather than in the price of gold.
reserves in order to keep the global currencies stable, but now there is no longer a gold standard.
The crew has “fiat” currencies instead, and bank reserves are just cash
on-hand, which must equal a fraction of the outstanding loans. Dangerously low
reserves were seen as one cause of the Great Recession. The Basel Accords address capital
requirements for banks. Exchange rates are visible in terms of one currency relative to another,
rather than in the price of gold.