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What is the Silver Standard?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 30 August 2016
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A silver standard uses silver as a standard monetary unit for a monetary system. Silver was in fact the first metal to be used as a unit of currency, in Ancient Greece, and it was also the first currency to achieve a standardized status, with silver coins from Greece being accepted across the Mediterranean for trade and other financial activities. Today, no nation in the world uses a silver standard.

The golden era, so to speak, for the silver standard occurred between the 15th and 19th centuries, when numerous nations had adopted a silver standard. In monetary systems which used a silver standard, a specific weight of silver was utilized as a standard unit of account. People could freely exchange silver coin and silver by weight for goods and services, and money could be converted into silver upon demand. Some notable users of the silver standard included the British Empire, China, Ancient Greece, and Spain. Colonization of overseas territories provided a number of nations with access to significant silver deposits which increased their wealth considerably.

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Starting in the 1800s, several nations began switching to a gold standard. Prior to the official adoption of a gold standard, the groundwork for the switch was already laid, as the values of the metals tended to remain proportionate to each other and both were widely used in trade. China and Hong Kong, in 1935, were the last to give up the silver standard. The gold standard was likewise abandoned by a number of nations in the 20th century.

Although silver standards are no longer in use, silver continues to be widely traded and people also speculate in silver. Silver and gold reserves are maintained by a number of nations and investors and the value of this precious metal is tracked by many financial authorities. Silver values are generally given by weight, and also for specialty silver products which may fetch more on the open market than their weight alone can account for.

Some critics have suggested that a return to silver and/or gold standards is in order, arguing that it strengthens financial systems. Returning to such a standard would require considerable work on the part of economic regulators, banks, and other entities in the financial industry. Decoupling the value of money from precious metals radically changed monetary systems around the world and this change may not even be reversible, even if regulators and governments determined that it was desirable.

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