Wednesday, April 1, 2009

Russia backs return to Gold Standard to solve financial cris

Russia to play peripheral role at the G20 summit. However Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system.

Mr Dvorkevich said it was "logical" that the new currency should include the rouble and the yuan, adding that "we could also think about more effective use of gold in this system".

The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.

It was revived as part of fixed dollar system until US inflation caused by the Vietnam War and "Great Society" social spending forced President Richard Nixon to close the gold window in 1971.

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