Foreign Exchange Market

Comparison Essay # 111609

Accounting > Financial
Business > Finance, Investment and Banking
Political Science

This paper looks at the foriegn exchange market and compares it to the gold standard monetary system.

1,033 words () | 3 sources | APA | 2008 United States

Paper Summary:

In this article, the writer notes that the foreign exchange is the world's biggest financial market and consists of trading between central banks, large banks, governments, and additional financial institutions and markets. The writer then looks at the history of the gold standard monetary system and the beginnings of the foreign exchange market. The writer discusses that the foreign exchange market is unique for several reasons such as the extreme market liquidity, the significant number and diversity of traders, and the trading volume. The writer concludes that the foreign exchange market is an environment which benefits both investment firms and commercial banks within the trading of currencies.

From the Paper:

"Around the world there are several contributors in the foreign exchange market. However, most business takes place within New York, London, Tokyo, and Singapore. Small investors or entrepreneurs are a minor part of the market and trades indirectly with brokers and banks. In the foreign market trades can be made 24 hours a day. The foreign exchange market consists of the interbank market and the retail market. Transactions in the retail market usually involve smaller amounts where transactions in the interbank market are mainly for large amounts of money. Rates and quotations are also an important function in the foreign exchange market. When dealing with international business foreign currency exchange markets are an effective process. From the earliest times national currencies have existed in some form of trading."

Sample of Sources Used:

Ball, D. A., McCulloch, W. H. Jr., Frantz, P. L., Geringer, & J. M., Minor, M. S. (2006). International business: The challenge of global competition (10th ed.). New York: McGraw-Hill
Bank for international settlements. (2007, September). Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity in April 2007 Preliminary global results. Retrieved on March 3, 2008, from http://www.bis.org/publ/rpfx07.pdf
International Monetary Fund. (2005). Retrieved on March 3, 2008, from http://www.imf.org/external/about.htm