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Explain the gold standard and function of major foreign currency exchange markets

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Explain the gold standard and address the functions of the world's major foreign currency exchange markets.

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This solution helps explain the gold standard and address the functions of the world's major foreign current exchange markets.

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Hi there,

Here is some information for you regarding the Gold Standard and the role of the foreign currency markets.

According to The Encyclopedia of Economics and Liberty the gold standard was defined as "a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold. National money and other forms of money (bank deposits and notes) were freely converted into gold at the fixed price." A county under the gold standard would set a price for gold, say $100 an ounce and would buy and sell gold at that price. This effectively sets a value for the currency; in our fictional example $1 would be worth 1/100th of an ounce of gold.

Some history on the Gold Standard and the creation of the foreign currency ...

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