Business

Functions of the worlds major foreign exchange markets.

Positive and negative aspects of using Gold standard

By

OMAR KHAN

Before I start my summary about the functions of the worlds major exchange markets and the positive and negative aspects of using gold standard we first must go back to when money was invented or lets go even before that why was it invented. Before all this money people use barter trade to trade commodities, commodities at that time were things like Salt, tobacco, cattle and seeds and commodities like these were traded for other commodities, but this system had a flaw for example what if a person wanted to keep my commodities but still want other commodities. This is one of the reasons money was invented so simply people could buy things that they wanted. Using gold and silver as common commodities soon money was in the form of gold and silver, which are still valuable in the present day later money was in the form of print but was still backed up by gold and silver, “With the introduction of paper currency and non-precious coinage, this meant that what money itself was made of no longer had to be very valuable. “Representative money was backed by a government or bank's promise to exchange it for a certain amount of silver or gold, for example, the old British Pound bill or Pound Sterling was once guaranteed to be redeemable for a pound of sterling silver. For most of the nineteenth and twentieth centuries, the majority of currencies were based on representative money through the use of the gold standard” (Mary Bellis, 2003). Much later different nations invented their own currencies for their own people, now we move in to foreign exchange markets and the positive and negative aspects of using gold standard.

Starting with a plain explanation of FOREX by Ball, McCulloch, Frantz, Geringer, and Minor (2006 p.166), FOREX "is a place where monies can be bought, sold, or borrowed". Locations are in numerous countries and cities, but the main...