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A world reserve currency can be defined as a currency which is kept in large quantities by many different governments and institutions for their international transactions. The world reserve currency is considered as safe-haven currency.
As of the 20th century, the US Dollar was made the world’s reserve currency and because of that the US government has an advantage of over $100 billion per year when they borrow capital from other countries.

World War 2 and Marshall Plan:

World War 2 destroyed many of the countries in Europe and Asia, except the United States of America. As a result European countries were running out of their gold reserves and borrowed from USA. This made USA ending up with large gold reserves, which resulted in USA being the only nation left with a good economy, making it a major political and economic power after the war.
In 1944, the allied nations came together in an effort to make an international monetary system which would prevent the economic crisis and sustain the economies around the world following WWII. The Allied nations named it “Bretton Woods Agreement”, which laid foundations for an international monetary system that created rules for economie…
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Wovch avatar
Wovch 29 Jan.

well done

FXNOAD avatar
FXNOAD 30 Jan.

Great article, keep it going

Yulia10 avatar
Yulia10 30 Jan.

nice article

al_dcdemo avatar
al_dcdemo 31 Jan.

Very well done!

adigunolluwaseun600 avatar

good job

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24/61
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History of Forex

August 15, 1971, US President Richard Nixon announced the decision to cancel the free convertibility of the dollar into gold (abandoned the gold standard). In December 1971, in Washington, the Smithsonian agreement was reached whereby instead of 1% fluctuations of the currency against the US dollar were allowed fluctuations of 4.5% (9% for non-dollar currency pairs).
It destroyed the system of stable exchange rates, and became the culminating event of a crisis in the post-war Bretton Woods monetary system.
Replaced by Jamaican currency system, the principles of which were laid in March 1971 on the island of Jamaica with the participation of 20 of the most developed states of the non-communist block. The essence of the changes was to looser policy on gold prices. If earlier exchange rates were stable by virtue of the gold standard, after making such a floating rate of gold has led to the inevitable fluctuations in exchange rates between currencies. This gave rise to a relatively new field of activity - trade in foreign exchange, when the exchange rate began to depend not only on the gold equivalent of the currency, but also by market demand / supply on it.
Quickly …
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9jakas avatar
9jakas 12 Sep.

Nice work...am proud to be in this market as a trader.

Airmike avatar
Airmike 23 Sep.

nice

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14/22
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Abstract
The interconnectedness between trade balance, interest rates and foreign exchange rates of national currencies is discussed. The case for gold standard and free market interest rates is outlined. The reasoning behind the introduction of free-floating exchange rates is presented. The inherent flaws of current system are exposed; the indispensable conditions for balanced trade and fair exchange rates are formulated.
By historical standards the currently existing global system of free-floating fiat currencies is fairly new – the last tie of US dollar with gold was severed in August 1971. Although this drastic step was initially offered to the American public as a temporary measure, the course of action had never been reversed. The immediate fallout, albeit unnoticed by public, had profound effect on the global economy – gold has been supplanted by fiat currency, namely US dollar, as clearing tool of international trade. Somewhat flawed, but overall rather robust, system that kept multilateral international trade in check was insidiously superseded by a system inherently unstable and, as history demonstrated, bereft of necessary ability to balance international trade. Trade …
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Elani avatar
Elani 24 Nov.

Excellently written article!

VictoriaVika avatar

Great one, well done! Good luck with it :)

Marenno avatar
Marenno 25 Nov.

Interesting

fxigor avatar
fxigor 18 Dec.

I am glad when I can learn more about fundamental analysis. Nice Back-feed loop resulting from trade deficit Figure.

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