Arrange the following developments in the International monetary system in the order of sequence starting from oldest to newest:

A. Gold standard
B. Smithsonian arrangement
C. Specie commodity standard
D. Floating Rate Regime
E. Fixed Party System

Choose the correct answer from the options given below:

Correct option is D

The correct sequence is C (Specie Commodity Standard) → A (Gold Standard) → E (Fixed Party System) → B (Smithsonian Arrangement) → D (Floating Rate Regime).

1. (C) Specie Commodity Standard (Oldest): The Specie Commodity Standard was the earliest monetary system where the value of money was directly tied to commodities such as gold and silver. It laid the foundation for the later Gold Standard system.
2. (A) Gold Standard: This system emerged prominently in the 19th century, where the value of currency was directly linked to a specified quantity of gold. It provided stability but lacked flexibility.
3. (E) Fixed Party System (Bretton Woods System): Post-World War II, the Bretton Woods system introduced fixed exchange rates between currencies, pegged to the US dollar, which in turn was convertible to gold.
4. (B) Smithsonian Arrangement: This 1971 agreement modified the Bretton Woods system after the collapse of the Gold Standard. It adjusted exchange rates and marked the beginning of a shift toward more flexible systems.
5. (D) Floating Rate Regime (Newest): After the Smithsonian Agreement failed, the Floating Rate Regime emerged in the 1970s, where exchange rates are determined by market forces.

Information Booster

• Gold Standard ensured currency stability but was rigid during economic crises.
• Bretton Woods introduced global economic institutions like the IMF and World Bank.
• The Floating Rate Regime allows currencies to fluctuate based on demand and supply, providing flexibility to address trade imbalances.