It all began with The Bretton Woods Agreement which was signed in 1944. Agreement aimed at setting up international monetary stability by preventing money from flying across nations and restricting speculations with the world currencies. Before the agreement was introduced, the gold exchange standard (used between 1876 and World War I) dominated the international economical system. Under the gold exchange world currencies gained a new level of stability since they were backed up by the price of gold. It ruined the traditional old practice used by kings of arbitrarily debasing money and triggering inflation. However, gold exchange standard had its own weak points. As a particular economy gained strength, it would import mainly from abroad until it runs down gold reserves required to back up the money. Hence, money supply would shrink, interest rates would rise and economic activity would slow down to the extent of recession. Ultimately, prices of goods had hit bottom, appearing attractive to other nations, which would rush into buying sprees that injected the economy with gold until it increased its money supply, and drive down interest rates and recreate wealth into the economy. Such boom-bust patterns prevailed throughout the gold standard until the outbreak of World War I interrupted trade flows and the free movement of gold.

   After the Wars, the Bretton Woods Agreement was founded and participating countries agreed to try to maintain the value of their currency with a small margin against the dollar. It was forbidden for countries to devalue their currencies to their advantage and they could do so only for devaluations smaller than 10%. During fifties the constantly expanding volume of international trade led to massive movements of capital from post-war construction. It destabilized foreign exchange rates as set up in the original agreement.

   Finally, in 1971 the Agreement was abandoned, and the US dollar was longer be freely convertible to gold. In 1973 currencies of major industrialized countries became more freely floating - driven mainly by the forces of supply and demand of the foreign exchange market. Prices started to float on daily basis, with volumes, speed and price volatility increasing throughout the seventies, giving a good start to new financial instruments, market deregulation and trading liberalization.

   In the eighties cross-border capital movements accelerated with the advent of computers and technology, extending market continuum through Asian, European and American time zones. Transactions in foreign exchange rocketed from about billion a day in the 1980s, to more than half trillion a day two decades later.