The old gold standard

Old is gold, they say. A few countries like China and Russia seem to agree. Recently, Russia advocated a partial restoration of the gold standard -- the old system of anchoring a country’s currency with a specific amount of gold -- to inculcate more stability in the world monetary system. China has been pressing for the need to replace the dollar with Special Drawing Rights (SDR) as the world's main reserve currency. The Chinese contention is that a super-sovereign reserve currency not only eliminates the risks inherent in a credit-based currency such as the dollar -- in contrast to one backed by gold -- but also makes it possible to manage global liquidity better. So, is it a good idea to revert to the gold standard of old as a solution to the world’s economic woes?

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