The gold standard had its advantages, no doubt. Exchange rate stability made for predictable pricing in trade and reduced transaction costs, while the long-run stability of prices acted as an anchor for inflation expectations. Being on gold may also have reduced the costs of borrowing by committing governments to pursue prudent fiscal and monetary policies.
The gold standard provided significant benefits, such as stability in exchange rates, which led to more predictable pricing in international trade. This stability reduced transaction costs for trading nations. Additionally, a stable price environment helped anchor inflation expectations, fostering trust in currency value.
By adhering to the gold standard, governments might have also lowered borrowing costs. This was due to the commitment to maintaining sound fiscal and monetary policies, promoting economic stability and encouraging prudent financial practices among governments.
