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Submitted by jenni75 on April 27, 2008
Category: Business
Words: 1039 | Pages: 5
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Foreign Exchange Markets
In The Beginning
Foreign exchange dealing may be traced back to the early stages of history, possibly beginning with the introduction of coinage by the ancient Egyptians, and the use of paper notes by the Babylonians. Certainly by biblical times, the Middle East saw a rudimentary international monetary system when the Roman gold coin aureus gained worldwide acceptance followed by the silver denarius, both a common stock among money changers of the period.
(History of Currency 2007).
As the Middle Ages approached, international banking had become the way of foreign exchange. The use of bills where used as payment for merchant prices. By 1816 the gold standard was a fixed commodity (History of Currency 2007); The gold standard was taken up by trading countries: “When countries agree to buy or sell gold for an established number of currency units” (Rue 2004 pg 147). The countries that participated had decided on a fixed physical weight of gold, which the currency would circulation. This would make the currency directly redeemable with the valuable metal. Towards the end of 1879, the U.S. dollar transferred to the use of the gold standard that became the standard-bearer, which replaced the British pound when Britain and other European countries as World War I came about in 1914. Things worsened as the international depression had taken the dollar off the gold standard by 1933; This was known as the collapse in international trade as World War II approached. World War II destroyed Great Britain’s economy and the United States practically untouched. This made it the logical choice for becoming the reserved currency to the international financial markets.
45 countries were present at the United States request in 1945 to plan a new international financial solution. The plan was the Bretton Woods System, which was “A New Hampshire town where treasury and central bank representatives met near...
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