Foreign exchange trade or the forex market is currently the biggest and most active financial market in the globe today. It is the buying and selling of currencies and takes place on the international market and flows, as we can witness trillions of dollar exchanged daily. Nevertheless, the history of forex trading cannot be told without much interest and is traced back to several centuries, and it actually depicts the growth of international business and finance and technology as well. Now, it is high time to have a closer look at the key events that contributed to the formation of forex market as a unique phenomenon.
Ancient Beginnings:
The History of the Barter Trade and the Emergence of Money writer
The history of forex trading dates back to the early ages of civilizations that used barter system whereby people exchanged products without the use of money. Thus, with development of societies to complex, came the negative aspects of barter system and introduction of medium of exchange that is money. The first types of money included barter items, which were all accepted across the world due to the use of gold, silver and other metals.
It was around the 600 BCE that the first actual coins to be used for exchange were created in the region of Lydia which is in present day Turkey. These coins encouraged the exchange of goods and services between different proximate communities paving way for even more standard coinage. The first practice of barter most probably emerged during this period, particularly where merchants who travelled with along the trade caravan needed to substitute their currencies for those of the areas through which they were passing.
Money circles again and again in every field of endeavour; still more when power has become banking and the gold standard.
Banking in a modern sense started in the middle ages, where there were trading communities who needed better ways of transferring money. Banks in cities such as venice and Florence in the 15th century were involved in exchanging of currencies with customers tying this service to a fee. This period also saw the introduction of bills of exchange, which are basically written promises for the payment of some amount of money which could be circulated as credit.
Another significant development in the forex history was the setting of gold standard in the 19 th century. In this system money was anchored to a fixed amount of gold hence giving the world economy a stable base for trade. The gold standard made certain that currencies’ value could not be contrived, therefore keeping exchange rates somewhat fixed. This system was the way to go on world monetary affairs until the early years of the 20th century and facilitated the formation for the modern foreign exchange market.
The Evolution of Internet and The Emergence of Forex Trading Online
The last evolution process of the forex trading history is the technological one. The introduction of computers and internet towards the closing decades of the twentieth century enabled the evolution of forex trading from a preserve of institutional and corporate traders to a market that was open to the small scale traders. With the advent of Internet based trading floors in the early 1990s, forex trading became possible for everyone, literally, from any part of the globe.
Currently, forex trades involve, algorithm, fast flow of information, and traders from almost all over the world and financial organizations. The market is open for trading every day of the week and more to that, it is open from 5 in the evening to 5 in the morning, five days in a week in all the world’s financial hubs. The increase in technology has made forex trading to be one of the most active and easily accessible markets in the world.
Conclusion
Forex trading is proof that the current generated or produced financial systems and the entire trade systems across the world have enormously grown even if evolving. Starting from barter system and using of ancient coins, and moving forward to gold standard, Bretton woods, digital and technological advancement, forex market’s evolution has been marked and has passed through each such milestone. In the contemporary world, forex is one of the chief pillars of the global economy rendering the appropriate tools for the business, authorities, and people to hedge and benefit from the fluctuations of foreign exchange rates in the largest market in the world.
