Foreign Exchange Markets
...In this paper I will write a lecture that explains the gold standard. I will address the functioning of the world’s major foreign exchange markets. I will discuss in detail the positive and negative aspects of using the gold standard. This paper will also talk how currency fluctuates.
The U.S. dollar has been the dominant currency in the world’s transactions since the end of World War II in 1945. The U.S. dollar was dominant because the U.S. economy emerged from the war virtually undamaged and was clearly the most powerful in the world at that time. Over the next few decades Japan, and other countries in Western Europe and across the world had begun to develop powerful economies, and their currencies were being used along with the U.S. dollar.
Americans enjoyed a world where the U.S. Dollar was the main currency of exchange and stability throughout the last half of the Twentieth Century. As the first decade of the Twenty-first Century now draws to a close, however, a shock may be in store for Americans. The U.S. Dollar may no longer be the main currency of exchange in the world and may no longer be such a desired currency to hold.
How and why a currency increases or decreases in value, the effects of such changes, and the resulting effects on a nation and the world are very important matters to consider. Money, although often thought of as only a medium of exchange, has a value of it own and, as such, is also a commodity, in the same way oil, gold, silver, or corn are commodities (Feiler, Schilling).
The price of money as a commodity is often determined or set as a result of government action and international trade which is observed and then used to determine a value. Such value determination is done by the foreign exchange markets of the world. It is because of such markets that international trade and business can function smoothly or...
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