Forex Trading In The Context Of Modern History
During the first half of the twentieth century the British pound was the world's principal trading currency and was the currency held by many as their main 'reserve' currency. As a result, London was also seen as the leading center for foreign exchange. However, the Second World War severely damaged the British economy and so the United States dollar took over as the world's principle trading and reserve currency and retains that position today. This said, there are now a number of other currencies, principally the Yen and the Euro, which are also seen as reserve currencies.
Since the Second World War there have been a number of events which have proved instrumental in shaping today's Forex market.
The first was the signing of the Bretton Woods Accord in 1944 which stipulated that the United States, Britain and France would stabilize the world currency markets by pegging the major world trading currencies to the US dollar (which was itself pegged to the price of gold). This in effect meant that if the price of a currency against the US dollar fluctuated by more than one percent the central bank concerned had to intervene and buy or sell the currency in question as necessary to bring it back to within its one percent bracket.
The Bretton Woods Accord also set in motion the establishment of the International Monetary Fund (IMF) which was designed to provide a stable system for buying and selling currencies and to ensure that currency transactions could take place smoothly and in a timely fashion.
In addition, the aim of the IMF was to create a consultative forum to promote international co-operation and to facilitate the growth of world trade, while at the same time breaking down exchange restrictions which hindered international trade.
It was also part of the established role of the IMF to make financial resources available to member states on a temporary basis where this was considered necessary to further the aims of the IMF. Such loans were normally only made on the understanding that the country concerned would make substantial changes to rectify the situation which gave rise to the need for the loan in the first place.
One of the most significant events as far as the Forex market is concerned occurred in 1978 when the IMF proposed that currencies should become 'free-floating'. In other words, currencies should be traded against one another at a price that was dictated solely by the law of supply and demand and that there should no longer be a requirement to peg currencies to the dollar or for central banks to intervene in currency trading to support the price of a currency. This is not to say that central banks were prevented from intervening if they chose to do so, but merely that such intervention would now be entirely a matter of choice and not a requirement as previously stipulated by the Bretton Woods Accord.
The next major milestone was the establishment of European Monetary System which effectively came into force in 1979. The European Monetary System got off to something of a shaky start when Britain (one of the principle members of the European Community) decided not to join the system and Italy joined only under special arrangements. Britain did however later agree to participate to a limited degree by joining the exchange mechanism of the European Monetary System in 1990.
The final major development to affect the Forex market was the establishment of the Euro as a single currency for European Union member states in 1998 with eleven of the participating states replacing their national currency with the Euro.
Of all these developments it was the free-floating of currencies in 1978 which did more than anything else to boost the growth of the foreign exchange market. In 1978 Forex trading showed a daily turnover of about 5 billion US dollars and this figure rose in the following ten years to reach 600 billion US dollars by 1988. By 1992 this figure had reached 1 trillion US dollars and the figure continued to rise to a level of 1.5 trillion dollars by the turn of the century.
Related Tags: forex, imf, foreign exchange market, foreign currency market, bretton woods, european monetary system
ForexOnlineTradingSystem.info is the ideal place to learn Forex trading and provides information on a wide range of topics including currency exchange rates and the benefits of testing the water through mini Forex trading.
Your Article Search Directory : Find in ArticlesRecent articles in this category:
- Internet Based Forex Buying And Selling Class
By selecting to enrol in an online forex trading class, you are placing down a flag that you are tak - Fx Instruction Classes
Getting your self efficiently into the forex trading market, without taking undue dangers, can appea - Automatic Fx Trading
Intelligent Forex trading is performed by means of custom software applications that allow for non-s - Fibonacci Technical Analysis Overview
There is a unique ratio that could be used to describe the dimensions of just about everything from - Can A Forex Broker Help You Change Your Fortune?
Forex market is a volatile market and you should expect loses along with the profits. This very natu - Is It Important To Know About Forex Before Finding Forex Broker?
If you are planning to invest your money in the forex market, then you need to understand the rules - Managed Fx - Expert Managed Forex Service Will Make Easy Profits For You
Managed FX. Know what you need to easily start making profit in your forex trading account todayDo y - Fap Turbo Review - Facts About The Fap Turbo Expert Adviser!
FAP Turbo, despite being one of the older automated Forex trading systems, has managed to remain the - Forex Autopilot System - The Best Way To Use This Forex Software!
The Forex Autopilot System is an automated Forex trading program which will allow you to trade in th - Is Forex Trading Really That Risky?
You have most likely heard or maybe even experienced the risks involved in forex trading. It is not
Most viewed articles in this category:
- The Shocking Truth About the Forex Trading Industry!
You won't have to look far on the internet to find an endless barrage of web sites promoting the gla - Forex Trading - Money Management Secret (part 2)
Adjusting your trade size on a fixed percentage isn't a good idea. That we established in part 1. No - Trading System Possibilities
So many people continue to discuss the use of common technical indicators in trading systems, withou - A Beginner's Guide to Currency Trading
I'm sure that you must have heard of currency trading. But do you really understand what it is all a - Learn Forex Trading Online - An Introduction to Fundamental Analysis
It is often said that information is the key to successful Forex trading but, while accurate and up- - Forex Trading is NOT Just for the Pros
I had a discussion recently with one of my newsletter subscribers. He brought up the topic of forex - How Indicators and Patterns Point the Way to Forex Profits
If you have done even beginning research into trading, technical indicators and charting will become - Forex Trading from Home
Forex is one area of work at home opportunities that seems to be growing a great deal. People essen - Forex Advisory Services
Forex advisory services provide personalized consulting, currency forecasts and advice for corporati - Forex Currency Trading Systems
The forex currency trading system is the system, which lets the forex traders buy one currency and s