The History of Forex
As 2017 comes to a close the temptation is to spend your time doing one of two things. Either looking back over the previous 12 months and wondering how you might have invested differently, or looking forward to 2018 and attempting to predict exactly how the dollar, the euro, sterling and other currencies are going to behave. Given that making predictions – with Trump in the White House and Brexit unfolding at a torturous pace – has become more difficult than ever, we thought we’d take the opportunity to look back.
We’re not limiting ourselves to just 12 months, however. Although the technology which makes so much of Forex trading possible is a relatively new phenomenon, the basic principles underlying the trillions of dollars’ worth of trading which take place on the exchanges every single day go back years and, in some cases, decades and even centuries. Stable banking, secure currencies and the principles of trading are all factors which can take many years to set in place, and the following is a list of a few of key moments the on the journey toward the global market place as it exists today, as well as couple of quirkier, one-off facts.
- The moment which is generally regarded as the starting point of modern Forex is the creation of the gold standard in 1880.
- The next time you’re complaining about the way in which banks operate, you’ll know exactly where and when to trace the problem back to. The time is March 4th 1472 and the place Tuscany in Italy. That’s when the oldest functioning bank in the world, the Monte Dei Paschi di Siena, was first founded and it’s been operating without interruption ever since. As there wouldn’t be any Forex or reliable currencies without the foundation of a stable banking system, this is a key date in the history of currency exchanges.
- Anyone lamenting the slump which the pound suffered through most of 2017 can comfort themselves with the thought that, as of 1913, almost 50% of all foreign exchanges were traded using Sterling. Ironically, prior to 1914, most of these trades actually took place in New York, Berlin and Paris, with London not emerging as a global trading centre until 1914.
- The first recorded mention of ‘money changing’ thus far tracked down can be found in the Talmud, the holy book of Judaism, which stems from the biblical era, although the oldest surviving manuscript dates from 1342.
- The US Federal Reserve is so central to the global dominance of the dollar that it’s easy so fall into the trap of assuming that it has pretty much always been in place. The truth of the matter is that the Reserve was founded as late as 1908, and that prior to this date any bank in the US could issue its own money.
- There was a forex market based in Amsterdam during the 17th and 18th centuries, trading currencies on behalf of just two nations, England and Holland.