Central Banks and the Gold Standard

What happened

In 1694 the Bank of England was founded to lend money to the government, and it grew into the model for the modern central bank, issuing banknotes and managing the nation's money. By the 19th century, Britain and then much of the world tied their currencies to gold — the gold standard — under which a banknote could be exchanged for a fixed amount of the metal.

Why it matters

Central banks and the gold standard brought a new order and stability to money, underpinning the huge expansion of trade and industry in the 19th century — and shaping the financial system we still live with today.

Sources

• Bank of England. History of the Bank of England · Reputable source