Remember the times when we flip through the history books and we have found out that our ancestors have started barter trading long ago? It is the first method of official trading done as a seller and a buyer, but in fact both are actually giving things to each other. They have exchanged wax for hides, cottons for meat, and of course, some have found something special such as precious stones but were not really interested with the value of the stones but they rather exchange it for a big fat juicy rack of lamb.
Soon after the precious stones incident our ancestors have found out that precious stones holds values rather than meat that will go bad after a few days. Here the basic monetary trade has started. Coins were minted and used as the common trading value as opposed to barter trade. Soon, foreigners come from different land and there comes other coins that they have not yet seen before. To avoid messing up the values between shells, rocks, pebbles, and so on, one thing is in common and that is gold. Gold to them is what they recognize all over the world and that is the main element to be traded for as money.
It was then before the war, gold was exchangeable with banknotes and coins, which banks also recognize the legal trading method of that. Then come a time that paper notes have grown in a large number that causes inflation. This situation happened as a result from the absence of currency regulation, and will bring a lot of countries to a bad state with this situation prolongs.
Luckily after the war ends, a gathering of 45 nation’s representatives met at a conference held at Bretton Woods. This marks the first ever foreign exchange market that holds the US Dollar as a standard as compared to the gold. This standardizes the currency around the world and was coined the Bretton Woods Accord, which stabilized the overall economy around the world. At 1971 the Bretton Woods Accord was abandoned and so US Dollar would not be able to convert to gold anymore.
After the Bretton Woods Accord, there comes the Smithsonian agreement, which describes another major fluctuation. The Europeans are the ones this time trying to make a break from the pack of currency that grows and shrinks depending on the US Dollar, and they want an out of it. The European Economic Community wanted to fix their exchange rate as the European Monetary system but failed because of the other weaker European countries. Finally in the year 2001 it was announced the Euro Dollar, as introduced as a replacement of many euro currencies which strengthens their stance in the exchange market, United Kingdom was not part of them though because of its higher price of the Sterling Pound.
Even though the ever changing FOREX market is pushing the waves up and down daily, traders are still willing to trade as what the foreign currency used to be. The end of free floating currency values are coming soon but there are still volatile currencies such as Southern American countries which still sparks traders to trade on them.
