History of Forex
What is history of Forex trading?
In the past, the value of goods and services has been expressed by exchanging other goods or preferably called the barter system. The barter system is the oldest method of exchange and began in 6000 BC, introduced by Mesopotamia tribes. However, the barter system is realized not enough to meet the needs. One of the problems is what if one cannot find people who need each other’s goods.
Thus, the means of payment or exchange are created in various forms. Among the mediums that have been used are shells, beads, rare stones, and metals. The most widely agreed upon is the use of metals such as Gold and Silver as exchange mediums.
The governments that ruled at that time began to print their own ‘money’ by determining the rate of certain metals in it.
In 1944, foreign exchange control was introduced in an effort to control the power of supply and demand, with the aim of structuring the world economic system in a way that would stabilize the volatile foreign exchange market.
In July 1944, toward the end of World War II, the Allies (US, Great Britain, and France) met at the United Nations Conference on Finance and Finance held in Bretton Woods, New Hampshire, and established a foreign exchange system after the war.
Thus, the “Bretton Woods System” was established to realize that dream.
Accord sets the US Dollar at $ 35 per gold and sets other currencies to the dollar. During the 1960s, the uncertainty between the economies of different countries became more extreme, making some systems maintain a concentration system making it difficult for some parties to maintain that mooring system.
The Bretton Woods control system collapsed in 1971 when President Nixon suspended gold exchange standards. The dollar has lost its attractiveness as the sole international currency due to the effects of the rising trade deficits and government budget deficits.
In the 70s, European society tried to shift its dependence on the dollar. Finally, a new phase in the history of forex trading was born, the “Floating Exchange Rate System”. Since then, major currency transactions are done by banks only while other parties such as government and commercial companies have to go through banks as intermediaries. Entities that require currency exchange can contact by telephone and the bank will record the appropriate exchange rate for purchase or sale.
This is where the interbank market is created as a network without a center (Over-The-Counter) where there is no exchange center and no bourse like the stock market.
Today, the forex market is the largest market in the world. More than $6.6 trillion is traded on the forex market daily. The future of forex is shrouded in uncertainty, leading to everlasting opportunities for forex traders.
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