Standard gold (Gold Standard) and golden cash cover (the period from 1876 to
1933)
Currency is a broker of exchange used by people to buy their needs, as they
arise was initially shaped pieces of metal (gold or silver), and then evolved
over time to become Banknotes express a certain amount of metal (so that it is
equal to the currency specific value of gold), and knew this system the gold
standard.
In the beginning it was able individuals to replace paper currency with gold at
any time they choose, to be abolished central banks the possibility of
converting money into gold before the First World War, and with no possibility
of conversion there is no longer a need for a cover monetary gold per
Banknotes, took central banks printing money without the presence of gold
equivalent.
As a corollary been an increase in the quantity supplied of money, which has
led to high inflation and the increase in the prices of goods and services;
began States that have signed into the trap of inflation, imports large
quantities of gold to balance the supply of money with the equivalent of gold,
but the World War that stopped the ways Trade between the countries and
therefore stopped the importation of gold, and the deterioration of the global
economy between the two world wars and the beginning of the world seeks to
resolve a quick save the global economy.
In 1944, after the economic downturn caused by the two world wars, has been
holding a conference in the "Bretton Woods" state "New
Hampshire" in the United States in order to put an end to the
deterioration in the global economy, and because the United States was less
powers affected by World War has been agreed to stabilize currency exchange
rates against the U.S. dollar, so that the value of the dollar is installed in
front of gold, equivalent to $ 35 per ounce of gold.
It was not allowed to change currency worth more than 1% of the value of fixed,
and if increased up or down interfere with the state (represented by the central
bank) to be returned to its original value.
The collapse of the Bretton Woods Agreement and floating exchange rates in 1971
In 1970, the U.S. President "Johnson" funded the Vietnam War, which
led to the current account deficit the U.S. and led to an economic catastrophe
in the value of the dollar, and in 1971 the president, "Richard
Nixon" the newly-elected a timely manner, to prevent conversion of dollars
into gold, and canceled the installation rate of exchange in front of gold.
And all the major countries affected economically, and began to search for an
alternative system restore economic stability of the world, so By the year 1973
has been floating currency exchange rates and allowing the value of currencies
that change according to supply and demand.
And became Currency goods bought and sold, and there has been trade independent
to take advantage of buying and selling currencies due to changes in prices,
and here appeared the currency market, featured investment companies that trade
in it in order to achieve a profit, and appeared brokers retail who buy
currencies in large amounts to their clients, and the income of small Currency
market investors.
Advent of the euro
In the first of January 2002 euro became the official currency of twelve
European countries agreed to replace their currencies to the previous, to be
replaced by the euro, these countries are (Austria, Belgium, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and
Spain).
The euro managed to become a global currency with a significant weight, and is
now the second most actively traded currencies in the currency market after the
U.S. dollar.
