A parity, also known as a center, is an official fixed rate of exchange between two or more countries.
To ensure exchange rate stability, countries usually set upper and lower limits on market exchange rate fluctuations around foreign exchange parity.
Under the gold standard, all countries stipulated the gold content of their money.
The ratio of gold per unit of currency between the two countries is called seigniorage and is the basis for determining exchange rates.
Since gold can be exported and imported freely, the exchange rate always fluctuates between the point of gold export and the point of gold import around the seigniorage parity.
The exchange rate under this system is relatively stable, called the system.
Most countries have decoupled their currencies and have floating exchange rates.
However, in order to maintain exchange rate stability, countries still peg their currencies to some currency or peg to determine foreign exchange parity.
