How does the US Federal Reserve Works

How does the US Federal Reserve Works

The US Federal Reserve is one of the most important financial institutions in the world and currency traders usually pay a lot of attention to its actions. Therefore it will be interesting to explore the inner workings of the institution. The Federal Reserve or the FED is the central bank of United States; it has been established since 1913. Its main goals are to conduct the monetary policy of the country, to supervise banks and to provide liquidity and financial services to the government and to various depository institutions. The…

Read More

Why was gold used as a currency

Gold has been the world’s currency for thousands of years. The rise of the current monetary system with fiat money did not happen until the middle of the 20 century. It has been used by all major world civilizations throughout the whole history. Many people might wonder why gold was accepted as a currency for such a long time. There are many reasons, but the most important of them include the following: Gold was one of the first metals discovered by mankind as it was closer to the earth surface…

Read More

Overview of the Exchange Rate Systems

How exchange rates system works

The exchange rate is simply how much one currency is worth of another. Two main systems determine an exchange rate—a floating (fluctuating or flexible) and a fixed (pegged) currency. A floating currency is one that depends on how much buyers are willing to pay for it or what the supply and demand is. If a country’s economy is stable, the floating currency is advantageous for the country as its market can quickly change the rate to avoid inflation or other economic issues. If, however, the country has a weak economy,…

Read More