The gold standard is a monetary system that sets the value of the monetary unit in terms of a certain amount of gold. The issuer of the currency guarantees that he can give the holder of his bills the amount of gold recorded on them. An alternative is the bimetallic pattern, in which the currency is backed by a part of gold and another of silver.
Historically, the validity of the gold standard prevailed during the 19th century as the basis of the international financial system. It ended in the wake of World War I, since belligerent governments needed to print a lot of fiat money to finance the war effort without having the ability to back that precious metal money.
During the Bretton Woods Agreements, it was decided to adopt the US dollar as an international currency, under the condition that the Federal Reserve (the central bank of that country) held the gold standard. But as of 1971, it definitely breaks down, so the dollar de facto became a fiat currency backed by a US government tax and without intrinsic value, but with its own legal value.Edit best answer History