Legal Definitions - paper standard

Definition: A monetary system that is based entirely on paper currency and is not convertible into gold or other precious metals. This is in contrast to the gold standard.

Example: In the United States, the paper standard was adopted in 1971 when President Nixon ended the convertibility of the US dollar into gold.

Explanation: This means that the value of the US dollar is not backed by gold or any other precious metal, but rather by the faith and credit of the government. This can lead to inflation and other economic issues if not managed properly.