Foreign Exchange Markets - A General Overview And Structure Of The Forex Market

Near the end of World War II a conference named as Bretton woods had lots of nations

reach an agreement on a reserve currency system based on the US dollar. The World Bank and other organizations agreed, and a fixed exchange rate system was reached. The value of the dollar was fixed on a specific amount of gold, and other currencies were fixed on value to the dollar.

Currency trading after this however has evolved and currencies have grown in value, and gone down in value, leading to fluctuation.

Trading has been practice for a very long period of time. Unlike these days, they exchange natural materials such as lumbers, meat, animals, and more. This is highly indentified to be called as pure trading. Hence, this kind of system in the economy has a lot of limitations it has serve the human raise for many decades. The advantages of this kind of trading have been quickly seen by many nations. For some tribes they use this as money in the old days such as pretty rocks, animal teeth, animals, and precious metals. But the most widely accepted material for trading in the old days and even today is silver and gold.

Silver and gold has transformed in to coins and it has been used by the British community as their standard currency. In the past paper money has been introduce but it wasn't that popular before. The program was you ought exchange your gold for the paper money. But this way didn't happen so often even though it's legalized. Up until World War I, gold has been broadly known to be the official currency of many nations and it was supported by central banks. Hence, the conversion of gold to paper money is not usual. Several banks no longer keep gold reserves in their vaults like in the US for it has happened once with Fort Knox. Inflation then has taken place.

Almost the end of the period of the World War II, a conference was made named as Bretton woods that lead to an agreement on a reserve currency program based on US dollars. The exchange rate system was attained after the conference for many organizations and the World Bank agreed. So then, people will change trade their gold for the adequate amount and other foreign currency

by: Devon Reyes

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