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Greate Quotes

"...Time is more valuable than money. You can get more money, but you cannot get more time...."

Jim Rohn

 

"...A bank is a place that will lend you money if you can prove that you don't need it..."

Bob Hope

 

"...You just have to be opportunistic, and try to figure out what creates value.. where the bottom is, what creates incremental value, and in what combinations...."

John Malone

History of FOREX

Have you ever wondered how forex came to be? With worldwide trade happening every minute, it is important to first take a brief look at its history for forex's better understanding.

We first start with the concept of money as a medium of exchange. Products and merchandise were exchanged across different provinces and then across different territorial boundaries since 2000 BC. Since ancient Egypt, money has been used as a medium of exchange and evidence of this is found in the tombs of the Pharaohs. However, it was in Babylon where the first use of paper bills and notes are credited. The first money changers are also recorded in the Middle East, in the region of Mesopotamia, where coins from different cultures are exchanged with one another.

During the Roman Empire, the paper bills gained popularity aside from the gold and silver coins. The paper bills made foreign currency exchange better for traders, thus making the region to flourish. We may say that this is the "baby" stage of foreign exchange. Markets are slowly opening up beyond territorial boundaries. This would rapidly expand in scope; breadth and development come the 19th and early 20th century.

Before the price shocks caused by World War I, markets here and abroad are relatively stable, but not to mean inactive. It just shows that there were not much speculations happening around as the economy of many regions in Europe, East Asia, and America were expanding. With high speculation in after the first World War, many traders drew negative conclusions over forex. However, things were about to change after the Great Depression and the World War II. International agreements and accords were created regarding trade that facilitated countries to look at forex in a better light.

In 1944, after the War, the Bretton Woods Accord was signed to create a balance in the world economy between those that are industrialized and those devastated by war. This accord created the World Bank and the International Monetary Fund, and it also pegged world currency with the US dollar.

However, in time, the Bretton Wood Accord failed in many aspects such as the flexibility it gives to traders. In 1971, the Smithsonian Agreement was signed. This started the use of free-floating system in world exchange. The free-floating system allowed every country to peg their own currencies. This also marked the start of the foreign exchange, or forex, as we know it today.