How it all began
It is said that the Forex market has been around since the middle ages. At that time the trading of currencies was done between international banks. Between then and now there have been several more important dates in the history of the Forex market. To help you better understand the evolution of Forex trading we have them outlined below.
The year 1875
The importance of the year 1875 is connected to the creation of the gold standard monetary system. The creation of this system puts a stop to the use of gold and silver for international exchanges between countries. Since that year currencies are backed with a certain gold or silver amount.
The year 1944
1944 is the year of the signing of the Bretton Woods Agreement. Several important changes were made with the Bretton Woods Agreement, such as:
- The U.S dollar replaced the British Pound as the primary currency in the market
- Fixed exchange rates were established
- The International Monetary Fund (IMF) was created
- The International Bank for Reconstruction and Development (now part of the World Bank) was created.
The year 1971
On August fifteenth President Nixon announced that the dollar will no longer be backed by gold. This event put a stop to the Bretton Woods Agreement. In its place the Smithsonian Agreement was signed. Several important points in it are:
- Devaluation of the dollar by 10 percent
- Increase in the price of Gold to $28 an ounce
- Increase in other currencies
The years 1973-1974
During these two years the OPEC oil crisis takes place. During the crisis the increased inflation causes an increase in interest rates.
The year 1979
This year marks the creation of the European Monetary System (EMS). The EMS’ goals include:
- Better economic integration and stability
- Create a better mechanism for controlling exchange rates
- European Currency Unit (ECU) to be the main currency in the EU
The years 1990-2002
In 1990 the European Economic and Monetary Union (EMU) was established. In the next decade its goals were formed to be:
- Establish fixed exchange rates
- Create and put into circulation the Euro
- Reach a more stable economic environment
- Achieve increased monetary stability
- Creating of a single European bank
Since these years the technological advancement and the creation and spreading of the internet have made the Forex market an international trade market. Today anyone can trade on Forex.