Reasons why Forex Matters to our History

Where does Forex come from? When did it start? Let’s take a look at the whole history of Forex and the evolution of Forex trading through our historical introduction to the Forex market.

Welcome to this historic introduction to the foreign exchange market. Have you ever asked where Forex comes from?

We will examine with you here the turning points in the history of Forex trading, highlighting all the events that played a vital role in the history of Forex.

Its History

The history of the foreign exchange market begins in 1875 with the creation of the international monetary system using the gold standard. Prior to 1875, countries mainly used gold and silver as an international means of payment.

But paying with gold and silver was a big problem: its value depends on external factors, such as the discovery of new deposits, which has the effect of disrupting supply and order.

That factor would definitely change the history of Forex

The purpose of implementing the gold standard was to ensure the conversion of a currency into a specific sum of gold. The currency was then guaranteed by gold, measured in ounces. Countries needed to have a gold reserve large enough to carry out financial transactions.

The price difference between one ounce of gold expressed in a different currency pair was the exchange rate for these two currencies.

The birth of an international standard for foreign exchange transactions between different countries has completely changed the history of the foreign exchange market.

Forex Trading

Finally, the gold standard monetary system collapses at the beginning of World War I. The political unrest with Germany is causing the major European powers to undertake military projects.

This caused a gold deficiency:

  • countries no longer had enough gold reserves to trade against the surplus of government-printed coins.
  • A new turning point in the history of Forex trading was coming.

The abandonment of the gold standard monetary system led to the search for a new direction in the context of the foreign exchange market.

Forex Trading

In July 1944, the Allied countries met at Bretton Woods, New Hampshire, to deliberate on what would later be called the “Bretton Woods Monetary System.”

This new monetary system allows:

  • The introduction of a fixed exchange rate method – which becomes the reference reserve currency.
  • The unique conversion of the US dollar into gold. – The creation of three international agencies, which monitor all economic transactions.
  • Bretton Woods’s monetary system lasted only 25 years. Its failure is mainly due to the fact that the US dollar is the only convertible gold coin.
  • On August 15, 1971, the United States suspended the exchange of gold for US dollars by foreign banks.

We hope that this historic introduction to the Forex market will make you feel the Forex history inside.

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Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.