How Did Forex Get Started?
Forex is the exchange of currency, therefore it has been around since the beginning of time. Well, since the beginning of humans. Here are some chronological milestones of the evolution of forex:
- In ancient biblical times, commission was charged to change money for people.
- In the 4th century, it became vital for trade. The Byzantine economy had a monopoly on currency exchange.
- In the 15th century, the Medici family opened banks in foreign countries to exchange currencies for textile merchants.
- During the 17th and 18th centuries, currency trading spread. Amsterdam maintained an active forex market. Forex agents transact for England and Holland. Banco Espirito Santo began forex trading as a business.
- In 1913, half of the world’s forex used the British Pound. Forex banks in London increased from 3 to 71.
- In 1944, the Bretton Woods Accord allowed currencies to fluctuate within 1% range to the currency par and tied to gold, which was $35 per ounce. The US dollar became the global reserve currency.
- In 1971, US President Nixon ends the Bretton Woods Accord and the currency system became free-floating.
- In 1973, Reuters replaced telephone and telex with computer monitors for quotes. The Smithsonian Agreement allowed currencies to trade within a 2% range.
- In 1981, China allowed some to participate in forex trading and South Korea allowed free trade of currencies.
- In the 1990s, Banks created their own trading platforms. Retail forex brokers made internet-based trading platforms for individual traders.
Because of the internet, everyone can participate in the forex market, trading at home from their computers!