The market fx is an interbank money market or between other counterparties, created in 1971 began to appear when floating exchange rates. The foreign exchange market is enormous when compared to other markets. For example, the average daily volume of trade involving the U.S. Treasury is 300 billions of dollars and the U.S. stock market has an average daily volume of less than 10 billions of dollars. Ten years ago Wall Street Journal has estimated that the daily volume of trading occurring on forex exceed 1.000 billions of dollars. Today this figure has grown to exceed 1.800 billion dollars a day.
Before 1971 an international agreement called Bretton Woods Agreement prevent speculation in the currency markets. The agreements Bretton Woods were concluded in 1944 with the aim of stabilizing international currencies and prevent the flight of capital between nations. These agreements stared at an exchange rate between the dollar and all currencies and fixed the exchange rate between the dollar and gold (35 dollars per ounce). Prior to this agreement, the gold exchange standard was in use until the 1876. The gold standard provided for the use of gold as the basis for each currency and in this way prevented kings and rulers of arbitrarily devalue the money and trigger the’inflation.
The gold exchange standard presented, however, problems. To grow, economy would import goods from abroad until the depletion of gold reserves. The result of this was a restriction of the money supply in the country that caused a rise in interest rates involving a slowdown in economic activity that could also lead to recession.
Finally, the recession would have caused a fall in commodity prices so low that they would have appeared convenient to other countries. This in turn led to a reverse flow of gold in the entry in the economy and the resulting increase in the money supply caused a fall of tasso d'interests and a strengthening of’economy. These pattern boom-recession were common in the world during the years of gold exchange standard and until the outbreak of World War I that interrupted the free flow of trade and consequently the movement of gold.
After the war it was adopted Bretton Woods Agreement, with which the participating nations agreed to maintain the value of their currencies within a narrow margin rate with the dollar. A rate was also determined to establish the relationship of the dollar relative to gold. The nations were forbidden to devalue its currency over the 10% to enhance its commercial position. Following the World War II international trade expanded rapidly because of the needs of post-war reconstruction and this caused massive movements of capital. This destabilized the exchange rates that were set by means of agreements Bretton Woods.
These agreements were finally abandoned in 1971, and thereupon the dollar was no longer convertible into gold. Starting from 1973, the currencies of most industrialized nations became more freely floating, being driven primarily by the forces of supply and demand. Prices were formed by volumes, speed and increasing volatility during the seventies. Ciò portò alla nascita di nuovi strumenti finanziari, to deregulation market and free trade. Also entailed an increase in the power of speculators.
In eighties the international capital movements were accelerated by the advent of computer and the market became continuous, with exchanges that took place between the continents Asia, European American ed, and the related time zones. The large banks created dealing rooms in which hundreds of millions of dollars, pounds, Euro and yen were exchanged in a matter of minutes. Today's broker work daily in forex, using electronic tools, eg London, where individuals exchange for tens of millions of dollars are completed in seconds. The market has changed significantly since the majority of financial transactions aimed not purchase or sale of goods but in order to speculate on the market being the intent of most of the operators to make money with money.
London has established itself as the leading global financial center and is the largest market forex world. This statement is not only due to its positioning, which allows it to operate during the opening of the Asian markets and American, but also to the creation of the market’Eurodollar. The Eurodollar market was to create during the years 50 when the proceeds to the USSR came from the sale of oil, all dollar-denominated, were deposited outside the U.S. for fear that they were blocked by the U.S. authorities. This practice meant that a large amount of U.S. dollars you were outside the control of the United States. These vast cash reserves were very attractive to investors around the world since they were subject to a very less penetrating and offered a higher profitability.
Nowadays London continues to grow as an increasing number of American and European banks establish their regional headquarters in city. The volumes traded on these markets are huge and smaller banks, the hedgers commercial and small investors rarely have direct access to this liquid market and competitive, because it does not meet the credit requirements is necessary because the size of their transactions are too limited. Anyway today market maker can break down their large units inter-bank and offer small traders the opportunity to buy and sell any number of these smaller units (lots).