14. To say that the Gold–Exchange Standard merely carries somewhat further the currency arrangements which several European countries have evolved during the last quarter of a century is not, of course, to justify it. But if we see that the Gold–Exchange Standard is not, in the currency world of to–day, anomalous, and that it is in the main stream of currency evolution, we shall have a wider experience, on which to draw, in criticising it, and may be in a better position to judge of its details wisely. Much nonsense is talked about a gold standard’s properly carrying a gold currency with it. If we mean by a gold currency a state of affairs in which gold is the principal or even, in the aggregate, a very important medium of exchange, no country in the world has such a thing.[14] Gold is an international, but not a local currency. The currency problem of each country is to ensure that they shall run no risk of being unable to put their hands on international currency when they need it, and to waste as small a proportion of their resources on holdings of actual gold as is compatible with this. The proper solution for each country must be governed by the nature of its position in the international money market and of its relations to the chief financial centres, and by those national customs in matters of currency which it may be unwise to disturb. It is as an attempt to solve this problem that the Gold–Exchange Standard ought to be judged. 15. We have been concerned so far with transitional systems of currency. I will conclude this chapter with a brief history in outline of the Gold–Exchange Standard itself. It will then be time to pass from high generalities to the actual details of the Indian system. The Gold–Exchange Standard arises out of the discovery that, so long as gold is available for payments of _international_ indebtedness at an approximately constant rate in terms of the national currency, it is a matter of comparative indifference whether it actually _forms_ the national currency. The Gold–Exchange Standard may be said to exist when gold does not circulate in a country to an appreciable extent, when the local currency is not necessarily redeemable in gold, but when the Government or Central Bank makes arrangements for the provision of foreign remittances in gold at a fixed maximum rate in terms of the local currency, the reserves necessary to provide these remittances being kept to a considerable extent abroad.