Trading manual part 1: Forex HistoryIt's necessary to learn some of the historic events who relate to currencies and the exchange of them. We will go through the global monetary system and how it became what it is nowadays. So, it basically started with the Gold Standard System. The invention of the gold standard monetary system in 1875 is among the most important events in the history of the currency market. Before the gold standard system was made, countries were commonly using silver and gold as a method of international payments. The major issue about that was the fact that the purchase price of these materials is dependent upon supply and demand. By way of instance, when a new gold mine was discovered the prices usually went down. The fundamental idea behind the gold standard was that authorities guaranteed the conversion of money into a specific amount of gold. Ln other words, a currency had back-up from gold. Obviously, governments needed a rather substantial gold reserve in order to meet up with the demand for money exchanges.
The late 19" centuryStay tuned for the release of part 2 very soon! Prior to the end of World War two, the allied states felt the need to prepare a financial system so as to fill the void that was left when the gold standard system was abandoned. In July 1944, more than 700 representatives from the Allies met in Bretton Woods, New Hampshire, to deliberate over what could be known as the Bretton Woods System. Throughout the late 19"' century, all major economic countries had pegged an amount of money to an ounce of gold. Over time, the difference in price of an ounce of gold between two currencies became the market rate for those two currencies. This represented the first official way of currency exchange in history. The gold standard finally broke down during the beginning of World War 1. Due into the political tension with Germany, the leading European powers felt a need to complete large military projects, so they began printing more money to help pay for those projects. The financial burden of these projects was so substantial that there was not enough gold in the time to exchange for all of the currency the governments were printing off.
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