“The Forex interbank market has a long history dating back to the late 19th century when the gold standard was established as the international monetary system. The gold standard provided a fixed exchange rate between currencies, and banks could exchange their reserves of gold for foreign currencies to settle international transactions.
However, the gold standard was abandoned during World War I, and countries began to use their currencies as a means of financing their war efforts. This led to the creation of a new foreign exchange market, where banks and other financial institutions could trade currencies with each other.
In the 1970s, the Bretton Woods system, which was established after World War II, collapsed, and currencies began to float freely against each other. This led to the development of a more sophisticated interbank market, where banks could trade currencies with each other at market-determined exchange rates.
In the early days of the interbank market, trading was conducted over the phone, and prices were not transparent. However, the advent of electronic trading in the 1990s revolutionized the market and made it more accessible to a wider range of participants.
Today, the Forex interbank market is the largest financial market in the world, with an estimated daily turnover of over $6 trillion. The market is open 24 hours a day, five days a week, and is accessible to participants from all over the world. The market continues to evolve, with the development of new trading technologies and the increasing involvement of non-bank participants, such as hedge funds and retail traders.”
Sourced from Chat GPT, assessed by Sean Lee.