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Foreign exchange market Part 2 (History)

Januari 21, 2018


From Wikipedia, the free encyclopedia

Ancient

Currency trading and exchange first occurred in ancient times.[4] Money-changers (people helping others to change money and also taking a commission or charging a fee) were living in the Holy Land in the times of the Talmudic writings (Biblical times). These people (sometimes called "kollybistẻs") used city stalls, and at feast times the Temple's Court of the Gentiles instead.[5] Money-changers were also the silversmiths and/or goldsmiths[6] of more recent ancient times.
During the 4th century AD, the Byzantine government kept a monopoly on the exchange of currency.[7]
Papyri PCZ I 59021 (c.259/8 BC), shows the occurrences of exchange of coinage in Ancient Egypt.[8]
Currency and exchange were important elements of trade in the ancient world, enabling people to buy and sell items like food, pottery and raw materials.[9] If a Greek coin held more gold than an Egyptian coin due to its size or content, then a merchant could barter fewer Greek gold coins for more Egyptian ones, or for more material goods. This is why, at some point in their history, most world currencies in circulation today had a value fixed to a specific quantity of a recognized standard like silver and gold.

Medieval and later

During the 15th century, the Medici family were required to open banks at foreign locations in order to exchange currencies to act on behalf of textile merchants.[10][11] To facilitate trade, the bank created the nostro (from Italian, this translates to "ours") account book which contained two columned entries showing amounts of foreign and local currencies; information pertaining to the keeping of an account with a foreign bank.[12][13][14][15] During the 17th (or 18th) century, Amsterdam maintained an active Forex market.[16] In 1704, foreign exchange took place between agents acting in the interests of the Kingdom of England and the County of Holland.[17]

Early modern

Alex. Brown & Sons traded foreign currencies around 1850 and was a leading currency trader in the USA.[18] In 1880, J.M. do Espírito Santo de Silva (Banco Espírito Santo) applied for and was given permission to engage in a foreign exchange trading business.[19][20]
The year 1880 is considered by at least one source to be the beginning of modern foreign exchange: the gold standard began in that year.[21]
Prior to the First World War, there was a much more limited control of international trade. Motivated by the onset of war, countries abandoned the gold standard monetary system.[22]

Modern to post-modern

From 1899 to 1913, holdings of countries' foreign exchange increased at an annual rate of 10.8%, while holdings of gold increased at an annual rate of 6.3% between 1903 and 1913.[23]
At the end of 1913, nearly half of the world's foreign exchange was conducted using the pound sterling.[24] The number of foreign banks operating within the boundaries of Londonincreased from 3 in 1860, to 71 in 1913. In 1902, there were just two London foreign exchange brokers.[25] At the start of the 20th century, trades in currencies was most active in Paris, New York City and Berlin; Britain remained largely uninvolved until 1914. Between 1919 and 1922, the number of foreign exchange brokers in London increased to 17; and in 1924, there were 40 firms operating for the purposes of exchange.[26]
During the 1920s, the Kleinwort family were known as the leaders of the foreign exchange market, while Japheth, Montagu & Co. and Seligman still warrant recognition as significant FX traders.[27] The trade in London began to resemble its modern manifestation. By 1928, Forex trade was integral to the financial functioning of the city. Continental exchange controls, plus other factors in Europe and Latin America, hampered any attempt at wholesale prosperity from trade[clarification needed] for those of 1930s London.[28]

After World War II

In 1944, the Bretton Woods Accord was signed, allowing currencies to fluctuate within a range of ±1% from the currency's par exchange rate.[29] In Japan, the Foreign Exchange Bank Law was introduced in 1954. As a result, the Bank of Tokyo became the center of foreign exchange by September 1954. Between 1954 and 1959, Japanese law was changed to allow foreign exchange dealings in many more Western currencies.[30]
U.S. President, Richard Nixon is credited with ending the Bretton Woods Accord and fixed rates of exchange, eventually resulting in a free-floating currency system. After the Accord ended in 1971,[31] the Smithsonian Agreement allowed rates to fluctuate by up to ±2%. In 1961–62, the volume of foreign operations by the U.S. Federal Reserve was relatively low.[32][33] Those involved in controlling exchange rates found the boundaries of the Agreement were not realistic and so ceased this[clarification needed] in March 1973, when sometime afterward[clarification needed] none of the major currencies were maintained with a capacity for conversion to gold[clarification needed], organizations relied instead on reserves of currency.[34][35] From 1970 to 1973, the volume of trading in the market increased three-fold.[36][37][38] At some time (according to Gandolfo during February–March 1973) some of the markets were "split", and a two-tier currency market[clarification needed] was subsequently introduced, with dual currency rates. This was abolished in March 1974.[39][40][41]
Reuters introduced computer monitors during June 1973, replacing the telephones and telex used previously for trading quotes.[42]

Markets close

Due to the ultimate ineffectiveness of the Bretton Woods Accord and the European Joint Float, the forex markets were forced to close[clarification needed] sometime during 1972 and March 1973.[43] The very largest purchase of US dollars in the history of 1976[clarification needed] was when the West German government achieved an almost 3 billion dollar acquisition (a figure given as 2.75 billion in total by The Statesman: Volume 18 1974), this event indicated the impossibility of the balancing of exchange stabilities by the measures of control used at the time and the monetary system and the foreign exchange markets in "West" Germany and other countries within Europe closed for two weeks (during February and, or, March 1973. Giersch, Paqué, & Schmieding state closed after purchase of "7.5 million Dmarks" Brawley states "... Exchange markets had to be closed. When they re-opened ... March 1 " that is a large purchase occurred after the close).[44][45][46][47]

After 1973

In developed nations, the state control of the foreign exchange trading ended in 1973 when complete floating and relatively free market conditions of modern times began.[48] Other sources claim that the first time a currency pair was traded by U.S. retail customers was during 1982, with additional currency pairs becoming available by the next year.[49][50]
On 1 January 1981, as part of changes beginning during 1978, the People's Bank of China allowed certain domestic "enterprises" to participate in foreign exchange trading.[51][52]Sometime during 1981, the South Korean government ended Forex controls and allowed free trade to occur for the first time. During 1988, the country's government accepted the IMF quota for international trade.[53]
Intervention by European banks (especially the Bundesbank) influenced the Forex market on 27 February 1985.[54] The greatest proportion of all trades worldwide during 1987 were within the United Kingdom (slightly over one quarter). The United States had the second amount of places involved in trading.[55]
During 1991, Iran changed international agreements with some countries from oil-barter to foreign exchange.[56]
Sources : https://en.wikipedia.org/wiki/Foreign_exchange_market

References
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  2. Jump up^ Global imbalances and destabilizing speculation (2007), UNCTAD Trade and development report 2007 (Chapter 1B).
  3. Jump up^ "Triennial Central Bank Survey of foreign exchange and OTC derivatives markets in 2016".
  4. Jump up^ CR Geisst – Encyclopedia of American Business History Infobase Publishing, 1 January 2009 Retrieved 14 July 2012 ISBN 1438109873
  5. Jump up^ GW Bromiley – International Standard Bible Encyclopedia: A–D William B. Eerdmans Publishing Company, 13 February 1995 Retrieved 14 July 2012 ISBN 0802837816
  6. Jump up^ T Crump – The Phenomenon of Money (Routledge Revivals) Taylor & Francis US, 14 January 2011 Retrieved 14 July 2012 ISBN 0415611873
  7. Jump up^ J Hasebroek – Trade and Politics in Ancient Greece Biblo & Tannen Publishers, 1 March 1933 Retrieved 14 July 2012 ISBN 0819601500
  8. Jump up^ S von Reden (2007 Senior Lecturer in Ancient History and Classics at the University of Bristol, UK) - Money in Ptolemaic Egypt: From the Macedonian Conquest to the End of the Third Century BC (p.48) Cambridge University Press, 6 December 2007 ISBN 0521852641 [Retrieved 25 March 2015]
  9. Jump up^ Mark Cartwright. "Trade in Ancient Greece". Ancient History Encyclopedia.
  10. Jump up^ RC Smith, I Walter, G DeLong – Global Banking Oxford University Press, 17 January 2012 Retrieved 13 July 2012 ISBN 0195335937
  11. Jump up^ (tertiary) – G Vasari – The Lives of the Artists Retrieved 13 July 2012 ISBN 019283410X
  12. Jump up^ (page 130 of ) RA De Roover – The Rise and Decline of the Medici Bank: 1397–94Beard Books, 1999 Retrieved 14 July 2012 ISBN 1893122328
  13. Jump up^ RA De Roover – The Medici Bank: its organization, management, operations and decline New York University Press, 1948 Retrieved 14 July 2012
  14. Jump up^ Cambridge dictionaries online – "nostro account"
  15. Jump up^ Oxford dictionaries online – "nostro account"
  16. Jump up^ S Homer, Richard E Sylla A History of Interest Rates John Wiley & Sons, 29 August 2005 Retrieved 14 July 2012 ISBN 0471732834
  17. Jump up^ T Southcliffe Ashton – An Economic History of England: The 18th Century, Volume 3Taylor & Francis, 1955 Retrieved 13 July 2012
  18. Jump up^ (page 196 of) JW Markham A Financial History of the United States, Volumes 1–2 M.E. Sharpe, 2002 Retrieved 14 July 2012 ISBN 0765607301
  19. Jump up^ (page 847) of M Pohl, European Association for Banking History – Handbook on the History of European Banks Edward Elgar Publishing, 1994 Retrieved 14 July 2012
  20. Jump up^ (secondary) – [1] Retrieved 13 July 2012
  21. Jump up^ S Shamah – A Foreign Exchange Primer ["1880" is within 1.2 Value Terms] John Wiley & Sons, 22 November 2011 Retrieved 27 July 2102 ISBN 1119994896
  22. Jump up^ T Hong – Foreign Exchange Control in China: First Edition (Asia Business Law Series Volume 4) Kluwer Law International, 2004 ISBN 9041124268 Retrieved 12 January 2013
  23. Jump up^ P Mathias, S Pollard – The Cambridge Economic History of Europe: The industrial economies : the development of economic and social policies Cambridge University Press, 1989 Retrieved 13 July 2012 ISBN 0521225043
  24. Jump up^ S Misra, PK Yadav [2] – International Business: Text And Cases PHI Learning Pvt. Ltd. 2009 Retrieved 27 July 2012 ISBN 8120336526
  25. Jump up^ P. L. Cottrell – Centres and Peripheries in Banking: The Historical Development of Financial Markets Ashgate Publishing, Ltd., 2007 Retrieved 13 July 2012 ISBN 0754661210
  26. Jump up^ P. L. Cottrell (p. 75)
  27. Jump up^ J Wake – Kleinwort, Benson: The History of Two Families in Banking Oxford University Press, 27 February 1997 Retrieved 13 July 2012 ISBN 0198282990
  28. Jump up^ J Atkin – The Foreign Exchange Market Of London: Development Since 1900Psychology Press, 2005 Retrieved 13 July 2012 ISBN 041534901X
  29. Jump up^ Laurence S. Copeland – Exchange Rates and International Finance Pearson Education, 2008 Retrieved 15 July 2012 ISBN 0273710273
  30. Jump up^ M Sumiya – A History of Japanese Trade and Industry Policy Oxford University Press, 2000 Retrieved 13 July 2012 ISBN 0198292511
  31. Jump up^ RC Smith, I Walter, G DeLong (p.4)
  32. Jump up^ AH Meltzer – A History of the Federal Reserve, Volume 2, Book 1; Books 1951–1969University of Chicago Press, 1 February 2010 Retrieved 14 July 2012 ISBN 0226520013
  33. Jump up^ (page 7 "fixed exchange rates" of) DF DeRosa –Options on Foreign ExchangeRetrieved 15 July 2012
  34. Jump up^ K Butcher – Forex Made Simple: A Beginner's Guide to Foreign Exchange SuccessJohn Wiley and Sons, 18 February 2011 Retrieved 13 July 2012 ISBN 0730375250
  35. Jump up^ J Madura – International Financial Management, Cengage Learning, 12 October 2011 Retrieved 14 July 2012 ISBN 0538482966
  36. Jump up^ N DraKoln – Forex for Small Speculators Enlightened Financial Press, 1 April 2004 Retrieved 13 July 2012 ISBN 0966624580
  37. Jump up^ (SFO Magazine, RR Wasendorf, Jr.) (INT) – Forex Trading PA Rosenstreich – The Evolution of FX and Emerging Markets Traders Press, 30 June 2009 Retrieved 13 July 2012 ISBN 1934354104
  38. Jump up^ J Jagerson, SW Hansen – All About Forex Trading McGraw-Hill Professional, 17 June 2011 Retrieved 13 July 2012 ISBN 007176822X
  39. Jump up^ Franz Pick Pick's currency yearbook 1977 – Retrieved 15 July 2012
  40. Jump up^ page 70 of Swoboda →
  41. Jump up^ G Gandolfo – International Finance and Open-Economy Macroeconomics Springer, 2002 Retrieved 15 July 2012 ISBN 3540434593
  42. Jump up^ City of London: The History Random House, 31 December 2011 Retrieved 15 July 2012 ISBN 1448114721
  43. Jump up^ "Thursday was aborted by news of a record assault on the dollar that forced the closing of most foreign exchange markets." in The outlook: Volume 45, published by Standard and Poor's Corporation – 1972 – Retrieved 15 July 2012 → [3]
  44. Jump up^ H Giersch, K-H Paqué, H Schmieding – The Fading Miracle: Four Decades of Market Economy in Germany Cambridge University Press, 10 November 1994 Retrieved 15 July 2012 ISBN 0521358698
  45. Jump up^ International Center for Monetary and Banking Studies, AK Swoboda – Capital Movements and Their Control: Proceedings of the Second Conference of the International Center for Monetary and Banking Studies BRILL, 1976 Retrieved 15 July 2012 ISBN 902860295X

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