Currency standards refer to the systems that determine the value of a country's money. Historically, many nations used the gold standard, where currency value was directly linked to a specific amount of gold. This meant that governments had to hold gold reserves to back their currency, providing stability and trust in the money's value. Today, most countries operate under a fiat currency system, where the value of money is not backed by physical commodities but rather by government decree. This allows for more flexibility in monetary policy, enabling governments to manage economic conditions without being constrained by physical reserves.