History Of Money: The Gold Standard Was Dominant System Until Mid-20th Century

The Reserve Bank of Zimbabwe (RBZ) recently launched a gold-backed digital currency which will be introduced on the 8th of May. The central bank said the value of the gold-backed currency is based on the current market price of gold and can be used for transactions just like any other type of currency.

In the modern era, money has taken various forms, including bank deposits, credit cards, and digital currencies such as Bitcoin. The gold standard, where paper money was backed by gold reserves, was the dominant monetary system until the mid-20th century when it was replaced by fiat currency, which is not backed by any physical commodity. The gold standard was abandoned because it caused frequent changes in value, making it unpredictable. It also restricted governments from using flexible exchange rates, which limited their ability to implement measures like reducing unemployment during economic downturns.

The concept of money has evolved over thousands of years, with various forms of currency being used by different societies throughout history. In ancient times, bartering was a common method of exchange, where goods and services were traded for other goods and services. However, this system had limitations, as it relied on the coincidence of wants and needs between two parties.