The history of foreign exchange foreign exchange market evolution

2023/2/26 7:12:17  read(3)

   Gold howtocopyforextrading system forextradingsignal the Bretton Woods Agreement  In 1967, a Chicago bank refused to provide a pound loan to a college professor named Milton Friedman because he best forex copy tradingtended to use the fund to sell short the British poundFriedman Mr. Friedman perceived that the pound to cashback forex ratio was too high, want to first sell the pound, and then wait for the pound to fall and then buy back the pound to repay the bank, so that the bank refused to provide loans based on the "Bretton Woods Agreement" established 20 years ago This agreement fixed the exchange rate of national currencies against the dollar, and the dollar and gold to set the ratio of $35 to each ounce of gold & nbsp nbsp;The Bretton Woods agreement, signed in 1944, sought to achieve international monetary stability by stopping the flight of currencies between countries and limiting international currency speculation Before this agreement, the gold exchange standard - which prevailed from 1876 to World War I - dominated the international economic system In the gold exchange system, currencies reached a new stage of stability backed by the price of gold Gold The exchange system abolished the old era of the king and rulers arbitrarily depreciated the value of the currency, triggering inflationary behavior  However, the gold exchange standard system is not perfect as a countrys economic strength, it will import a large number of goods from abroad, until the gold reserves needed to support the value of the countrys currency is depleted The result is that the money supply is tight, interest rates are higher, economic activity slowed to the recession Eventually, commodity prices hit rock bottom, gradually attracting other countries to come and buy the countrys commodities in large quantities This will re-inject gold into the country until it increases the countrys money supply, lowers interest rates, and re-creates wealth This boom-bust pattern continued throughout the gold standard era, until the outbreak of World War I interrupted the free flow of trade and gold  . nbsp;After several stormy wars, the Bretton Woods agreements were put in place and the signatories agreed to try to maintain the exchange rate of their currencies against the dollar and, if necessary, the corresponding rate against gold, allowing only small fluctuations countries were forbidden to devalue their currencies to gain trade benefits and were only allowed to devalue their currencies within a margin of less than 10% into the 1950s, when the continued growth in international trade led to a massive increase in the amount of money generated by Post-war reconstruction and the massive transfer of funds, which makes the Bretton Woods system established foreign exchange rates lost stability  This agreement was finally abrogated in 1971, the dollar will no longer be able to be converted into gold By 1973, the major industrial countries currency exchange rates floating more freely, mainly by the foreign exchange market to regulate the supply and demand for money with the volume of transactions, transactions speed as well as price volatility in the mid-1970s, the overall growth of the ratio floating daily, the gradual introduction of new financial instruments, market liberalization and trade liberalization to achieve  in the 1980s, with the advent of computers and related technology, transnational capital flows accelerated, will Asia, Europe, the United States and other continental time zone markets into one foreign exchange trading volume from the 1980s about $70 billion per day in the mid-1980s to $1.5 trillion per day today, 20 years later  the expansion of the European market  one of the major contributing factors to the boom in foreign exchange trading was the rapidly growing European dollar market; in the European dollar market, dollars are deposited in banks outside the U.S. Similarly, the European market refers to assets deposited in The Eurodollar market first took shape in the 1950s when Russia deposited its oil proceeds (in dollars) outside the United States to avoid the risk of dollar deposits being frozen by the U.S. government This created a huge offshore dollar vault out of the control of the U.S. government The U.S. government enacted laws restricting the lending of dollars to foreigners Because of the greater freedom and higher returns in the Eurodollar market, it Since the late 1980s, when U.S. companies began borrowing from offshore markets, the European market was found to be a wealth center for holding excess liquidity, providing short-term loans, and financing imports and exports  London was (and still is) the major offshore market in the 1980s, when the Bank of England, in order to maintain its dominant position in global finance In the 1980s, British banks began lending in U.S. dollars as an alternative to the British pound, thus becoming the center of the European dollar market Londons convenient location (operating between the Asian and American markets) also helped the region maintain a dominant position in the European market