I have taken this material from a Forex site, written by Debbie Graham - Section Editor:
The Forex online market was established in 1971, though it was only possible through a combination of technological, communicational and political advances.
1816-The Gold Standard Changes Forex History
The gold standard was a trading standard that was used as a fixed value for trading commodities. This means a certain weight in gold was established and used to trade for other currencies. This started to be in use in 1816, when the British pound was defined as 123.27 grains of gold. This meant that the British banks had a specific value that was defined and this in turn helped set the UK standard currency as stable.
The US adopted the gold standard in 1879 and replaced the British pound when the European nations stopped using the gold standard in the outbreak of World War I.
1944 - The Bretton Woods System
By the end of WW II, the economical status of the world's great nations had changed. The UK had suffered a great financial blow and its economical state was disastrous, while the US had remained relatively unchanged by the war. The dollar rose as the new standard of the financial market. At a conference held at Bretton Woods in the US in 1944, a new international financial framework was introduced into Forex history. The US dollar now became the new global reserve currency, when other currencies where set according to the dollar. At this summit the US, UK and France met in order to try and better the European economies scathed by the war, and to create a stable environment by which the global economies could restore themselves. The Bretton Woods Accord established the pegging of currencies and the International Monetary Fund (IMF), and established the world bank.
1973 - The Floating Exchange Rates
By 1972 a few major countries, such as the UK, suffered economical difficulties and initiated the floating of their currencies. The Smithsonian agreement was signed in 1971 and meant creating a more flexible agreement than Bretton woods where currencies had the ability to fluctuate more. The European market also tried to move from its dependency on the US dollar with more joints and agreements signed to ensure currencies' extended flexibility. Both the Smithsonian agreement and the European Joint Float collapsed, signifying the official switch to a free-floating currency system. Governments were now free to peg their currencies or allow them to freely float. In 1978, the free-floating system was officially mandated, but like previous attempts failed in 1993.
1994 - Forex History Changes With The Introduction of The Internet
During 1994, online currency trading made its debut, with the first online Forex transaction done. Since then, the market has grown to what it is today, with a total circle of more than $1.9 trillion every day. The big change in Forex history is that now anyone could participate and invest in the market. The vast amount of people trading online Forex is due mostly to the option of margin investments that are available with online Forex trading.
2002 - The Arrival of the Euro to Forex Trading
On January 1, 2002, the history of Forex trading was changed with the introduction of the Euro as the official currency between twelve European nations. The Euro is now the second most frequently traded currency in Forex markets. The countries first added to the Euro currency were: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. More details on the Forex market is available at Forex info. Forex History can be seen as spanning only one decade, or it can be measures from ancient times when coins were swapped. In any case no one undermines the importance of the Forex market today.
