At the end of the World War II 1944, the whole world was experiencing so much chaos that the major Western governments felt the need to create a system to stabilize the global economy. Known as the “Bretton Woods System,” the agreement set the exchange rate of the US dollar against gold. Which allowed all other currencies to be pegged against US dollar. This stabilized exchange rates for a while, but as the major economies of the world started to change and grow at different speeds, the rules of the system soon became obsolete and limiting.
Soon enough, come 1971, the Bretton Woods Agreement was abolished and replaced by a different currency valuation system. With the United States in the pilot’s seat, the currency market evolved to a free-floating one, where exchange rates were determined by supply and demand. At first, it was difficult to determine fair exchange rates, but advances in technology and communication eventually made things easier.
Once the 1990s came along, thanks to computer nerds and the booming growth of the internet (cheers to you Mr. Al Gore), banks began creating their own trading platforms. These platforms were designed to stream live quotes to their clients so that they could instantly execute trades themselves. Meanwhile, some smart business-minded marketing machines introduced internet-based trading platforms for individual traders.
Known as “retail forex brokers”, these entities made it easy for individuals to trade by allowing smaller trade sizes. Unlike in the interbank market where the standard trade size is one million units, retail brokers allowed individuals to trade as little as 1000 units
Bretton Wood System
The Bretton Wood System was established for the commercial and financial relations among the 44 countries like US, Canada, Australia, japan, Western European countries after the Second world war 1944 Under the Bretton Wood System, gold was the basis for the US dollar and other currencies were pegged to the US dollar’s value 1970 This system came to an end when US president Richard Nixon announced that the US would no longer exchange gold for US dollar. Bretton Wood system also created ‘International Monetary Fund’ and ‘World Bank’ After abolishing Bretton Wood System in 1970 both IMF and WB have remained the strong pillar of international currencies. The exchange rate was 1 ounce -- $35
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