What are the attributes of a Good Monetary Standard?


A good monetary standard or system should have the following attributes:

1. There should be simplicity in the monetary standard. It should be easily comprehensible. This would inspire public confidence.

2. It should command public confidence. This is essential for its smooth functioning.


3. It should be elastic. Monetary authority should be in a position to change its supply as per the requirements of the economy.

4. It should bear a legal sanction. Legal tender money ensures general acceptability under the law.

5. It should possess the characteristic of convertibility into some metals. Convertibility ensures public confidence and facilitates international payments.

6. It should have built-in flexibility through automatic working so that the least government intervention is needed.


It should maintain internal price stability and exchange stability in international transactions.

8. It should be economical. It should not involve high cost of operation. In this respect, paper money is much better than the metallic money.

9. The money should possess the qualities of easy portability, transferability, cognisability, uniformity, divisibility and stability in value.

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