Forex is the foreign exchange market is also known as the currency market. It takes its name from the English words "Foreign Exchange". It is the second largest behind the global financial market interest rates.
With globalization and the sharp increase in international trade, Forex has grown considerably and daily exchanges are now enormous. In 2010, according to the three-year study by the Bank for International Settlements (BIS), they were 4 000 billion.Before 1944, there was no trading between foreign currencies as at present. It was only possible to convert currencies into gold.
In 1944 took place the Bretton Woods conference of 44 countries in order to restore economic stability undermined by the crisis of 1929 and the Second World War. IBRD (International Bank for Reconstruction and Development), the World Bank and the IMF (International Monetary Fund) were created on this occasion. At the end of Bretton Woods the dollar began its hegemonic reign as he became the only currency convertible into gold ($ 35 per ounce of gold) and other currencies had their courses to be set at +/- 1% against the dollar.
On 10 April 1972 the European Monetary Snake (EMS) is created when the Basel Accord. It aims to set fluctuation band of +/- 2.25% between the currencies of the European Economic Community (EEC) and also with the dollar. Signatory countries hope to protect against speculative movements.
At the same time, the dollar continues to fall. Indeed the United States simply need to print money to pay their imports in dollars is causing a devaluation of the dollar. Despite several devaluations, the United States is forced to abandon the fixed exchange rates of the various currencies against the dollar standard and adopt a regime of floating exchange rates.
In 1979, the European Monetary Snake gives way to the European Monetary System. The ECE currencies are not linked together but linked to the ECU, the forerunner of the current euro. The fluctuation band of +/- 2.25% are compared to the ECU but devaluations of the currencies and the ECU are possible.
In the early 90s, following reunification, Germany is very successful and Deutsche Mark has a prominent place in the EMS since in practice it serves as a reference for other currencies. Germany increases its interest rates to control inflation, but this is problematic because other EMS countries (including the UK) are the ones in economic crisis and therefore wish to lower interest rates. This situation is no longer tenable and George Soros, who is well aware shorts 10 billion pounds 16 September 1992 in order to bring out the pound of the EMS. The Bank of England failing to cope, sterling out of the EMS and devalued Soros which gives a gain of over one billion. Following this episode, George Soros is nicknamed "the man who blew the Bank of England.
Other similar speculative attacks forced the country to expand the fluctuation bands of +/- 15% and EMS ended in the summer of 1993.
On 1 January 1999, the euro emerged as a virtual currency, replacing the currencies of 11 signatories on the financial markets and it is put into circulation on 1 January 2002 in its fiduciary form.
Despite the strong development of the euro, the dollar retains its status as the hegemonic currency:
Share of pairs in the Forex transactions:
