The history of forex


The history of forex.

The world monetary system has evolved a long time. Since 1867, acted "gold standard": the national currency exchanged only for gold, which "reinforces" every currency, preventing any issue of money governments, which accelerates inflation. However, the "standard" does not solve all problems. The State of the growing economy increased imports until the ending stocks of gold, as a result of money supply in circulation decreased, increased interest rates and economic activity slowed to a recession phase. Then prices fell so much that they started to import other countries, resulting in an increase in gold reserves, the growth of money supply, lowering interest rates and a strengthening economy. Most countries have developed it on the model of "boom - bust before the First World War, out shopping and golden streams.

After WWII and until 1971 operated a so-called Bretton Woods institutions on which the exchange of national currencies to the dollar have been fixed, and the dollar - pegged to gold: the price per ounce set equal to $ 35. Countries participating agreement was forbidden to organize devaluation to improve the exchange rate of its currency.

Post-war reconstruction of the world economy and increased trade between countries demanded the abolition of fixed rates, and in 1971 the Agreement "temporarily" suspended, since that time and started the history of Forex. By 1973 the currency of most developed countries have been freely convertible, and their rates regulated primarily by demand and supply. Over the 70h annual turnover rates and increased volatility, new financial instruments and foreign exchange operations have begun to attract speculators.