Until World War I it was always in prinicple feasible to go to the central bank and ask for gold or silver in place of your bank notes. Occasionally, however, such as in Germany after World War I, there would be a disastrous run on the banks, leading to silly inflation and the breakdown of the nation’s economy. This ‘permanently’ pegged all countrywide currencies to the US greenback, and fixed the value of the buck against gold at $35 per oz. Around the same time, the global monetary Fund and World Bank were made to help in maintaining international economic stability. This held until the early 1970s. But states were developing at different rates and in different directions, and in 1971 President Nixon postponed the gold standard. The US dollar was dropped as a reference point for almost all of the major countrywide currencies, and the relative values of different currencies started to vary according to business conditions and market forces.

All of a sudden it was possible to trade in currencies, and the financial institutions were fast to recognize the potential. Banks had to exchange money to offer their clients with foreign currencies for travel and importing products, but pretty shortly they were exchanging far more than they needed to profit from the continual rise and fall in the values of the different currencies.

Gradually, private stockholders joined in the game and the forex market mushroomed. The development of the Net meant the market became accessible to anybody, in theory. To deal with the massive numbers of potential new clients and because their costs were dropping, brokers began reducing the minimum investment amount.