This
half-way house return to the gold standard
was born out of the Genoa monetary conference of 1922, under which central banks
kept part of their reserves in such key currencies as sterling and dollars that
could still be exchanged for gold.
It did not include the right
for ordinary citizens to cash in notes for coin at a fixed price, implicit under
the true gold standard. Central banks too soon found danger; some, notably in
Europe, kept sterling in their reserves, thinking it was as good as gold, until
Britain suddenly went off the gold standard completely in 1931 and they found,
to their cost, it was not.
The only remaining link
to gold was through the dollar and that too was finally severed in 1971 after
which central banks could no longer trade dollars at the Federal Reserve for
gold.