IC Markets Review
History of the US Dollar
The US dollar is one of the most widely used currencies in the world today. But its journey to become a dominant global currency was a long and obscure one. In this article, we will explore the chronicles of the US dollar and world currency, from the old-fashioned forms of currency to the expose hours of day.
The Evolution of Currency
Before we can delve into the chronicles of the US dollar, we need to see at the expansion of currency as a stockpile. The dated form of currency was bartering, which committed exchanging goods and facilities for new goods and services. This system worked swiftly for little communities, but as societies grew larger, it became impractical. The first known form of currency was created in ancient Mesopotamia not quite 3000 BCE. The shekel, which was a unit of weight, was used to appear in out gloomy metals, such as silver and gold. These metals were subsequently used as a form of currency.
Over era, the use of pretentious metals as currency influence ahead to subsidiary parts of the world. The ancient Greeks used silver and gold coins, though the Romans used coins made from bronze, silver, and gold. In China, paper maintenance was invented in the 7th century CE. This in facilitate form of paper money was used for greater than 500 years back it was replaced by banknotes in the 13th century.
The Rise of the US Dollar
The US dollar as we know it today has its roots in the Spanish dollar, which was introduced in the 16th century. The Spanish dollar was widely used in the Americas, including the British colonies in North America. In fact, the Spanish dollar was for that gloss widely used in North America that it became the de facto currency in the colonies.
In 1792, the United States Mint was conventional, and the US dollar was officially introduced as the currency of the United States. At the times, the US dollar was backed by gold and silver, which meant that people could row their dollars for gold or silver at any epoch. This made the US dollar a stable currency, and it rapidly gained in popularity.
In the 19th century, the US dollar became the dominant currency in the world. This was largely due to the ensue of the US economy and the increased use of the US dollar in international trade. The US dollar was in addition to used as a superiority currency by many countries, which meant that they held large amounts of US dollars in reserve to foster stabilize their own currencies.
The Bretton Woods System
The US dollar's dominance as a global currency was cemented in 1944 behind the signing of the Bretton Woods Agreement. This self-starter conventional a added global monetary system that was based re the US dollar. Under the Bretton Woods system, the US dollar was pegged to gold at a truthful rate of $35 per ounce. Other currencies were later pegged to the US dollar at a immovable quarrel rate.
The Bretton Woods system was intended to market economic stability and prevent choice global economic depression as soon as the one that occurred in the 1930s. It was plentiful for a time, but it eventually became unsustainable. The US economy was growing hastily, and the demand for US dollars was increasing. This led to a large trade deficit, and the US was eventually motivated to devalue the US dollar in 1971. This effectively ended the Bretton Woods system and marked the start of a toting uphill times in global finance.
The Rise of Fiat Currency
After the collapse of the Bretton Woods system, currencies roughly the world became fiat currencies. A fiat currency is a currency that is not backed by a creature commodity, such as gold or silver. Instead, the value of fiat currency is based concerning the strength of the issuing country's economy.
The US dollar remained the dominant currency in the world, but new currencies began to get your hands on in popularity.