Foreign Exchange Markets

Running head : FOREIGN EXCHANGE MARKETS[Author][University] prosperous standardisedDuring the midst of land War II , associate countries led by the linked States made an agreement of establishing one international fiscal carcass that would help the member countries of the Allied forces to manage their domestic pecuniary policy and provide easy transaction for international commerce between countries in the international trade . In this run across , the Allied forces came up with the idea of using gold as the standard unit of account wherein there is a mulish weight of gold to various currencies of the member countries of the Allied forces . Gold stock(a) requires the issuers of a foreign currency to redeem detect based on its equivalence in gold as set by the Allied forces (Essortment .com 2002 . what is more , Gold Standard requires its country users to apply fixed-currency regime in to prevent the storage area of value of gold in the international market . Furthermore , Gold Reserve has been successful in improving the economical condition of Allied countries during its first few years . Until the season wherein the United States and United Kingdom had to withdraw their membership on the list of countries that uses gold reserve and shift to money militia as their supply of gold deteriorated and allotted to new(prenominal) heavens like militaryGold Standard , despite of its abolishment in the 1970 s even-tempered provide enough benefits among those countries that used the said monetary placement through providing links on various country s monetary and fiscal policies . But since the United States and United Kingdom , 2 of the most powerful countries during that time and have large sum of gold reserves on their vault relative to other Allied member countries , Gold Standard become stingy monetary system to the re primary(prenominal)ing Allied countries .

Aside from the insulation of United States and United Kingdom from the use of Gold Standard , another incidentor that triggered the abandonment of the said monetary system would be the increasing disadvantages of using Gold Standard which give be discussed later onAdvantages of Using Gold StandardOne of the reasons why the Allied forces chose gold than any other metal would be the fact that it is the rarest metal on earth , durable and can be easily divided into pieces . The rare quality of the gold makes it a lot easier for the government to monitor the supply of gold that circulates the market since if there will be a large physical body of gold in the market , then , there is a big possibility that the prices of gold will be cheaper and so with the fixed amount of gold per foreign currency . This is the main reason why silver was not used in the establishment of monetary system of Allied forces . Moreover , the force and divisibility qualities of gold make it a lot easier for the government to learn if a metal is indeed a gold or not . With these are the qualities of gold that made the members of the Allied...If you want to train a full essay, order it on our website: Orderessay

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