Monimetallism

Monimetallism is an economic term that describes a monetary system where a single metal serves as the standard of value and the basis for the currency. In such a system, the unit of account is defined in terms of a specific weight and purity of that single metal, often gold or silver. This contrasts with bimetallism, where two metals, typically gold and silver, are used to define the currency, and with the fiat money systems common today, which are not backed by any commodity.

Under monimetallism, the government or monetary authority would mint coins of the designated metal and also issue paper currency redeemable for a fixed amount of that metal. This redemption feature was intended to provide a stable and predictable value for the currency. The value of the currency would fluctuate based on the market price of the single metal.

Historically, both gold and silver have served as the monometallic standard at different times and in different countries. The choice of metal often depended on factors such as the relative abundance of each metal and prevailing economic policies. For example, many countries adopted the gold standard in the late 19th and early 20th centuries.

The primary advantage cited for monimetallism is the perceived stability and intrinsic value it offers, as the currency's worth is tied to a tangible commodity. However, it also meant that the money supply was constrained by the available supply of that specific metal, which could lead to deflationary pressures if the economy grew faster than the metal supply. Conversely, discoveries of large quantities of the metal could lead to inflation.