The Economics of Foreign Exchange

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The foreign currency exchange market is one of the most influential markets in the world today, the New York stock exchange, the Nasdaq and the Tokyo stock exchange the three largest securities markets in the world have a daily trading volume of around 300 billion USD combined… the foreign exchange market has a daily trading volume of around 6.6 trillion dollars per day according to the Bank for International Settlements (which is basically the central bank for central banks). This daily figure is more than the annual GDP of all but two of the largest nations on earth, China and the USA.

Well, in this video I want to explore three things: Why is the foreign exchange market so large and influential? Who actually conducts these trades and how? And while we are at it why is it that the UK pound is so valuable compared to all other currencies?

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Sources & Citations -

Kurt Schuler and Andrew Rosenberg, The Bretton Woods Transcripts

Dominguez, K. and Frankel, J.A., 1990. Does foreign exchange intervention work?. Peterson Institute Press: All Books.

Rodrik, D., 2006. The social cost of foreign exchange reserves. International Economic Journal

Cavallino, P., 2019. Capital flows and foreign exchange intervention. American Economic Journal: Macroeconomics, 11

Global imbalances and destabilizing speculation (2007), UNCTAD Trade and development report 2007

RC Smith, I Walter, G DeLong – Global Banking Oxford University Press

Foreign Exchange Control in China: First Edition (Asia Business Law Series Volume 4) Kluwer Law International, 2004

The $4 trillion question: what explains FX growth since the 2007 survey?, the Bank for International Settlements

Music - Beethoven - Moonlight Sonata (Piano Cover)

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[EconomicsExplained]

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See new videos early, participate in exclusive Q&As, and more!

[mrkanenas]

The more i learn about economics the more i realize that i dont know anything about it

[cr]

Can we all just stop for one second and appreciate the amazing parking job at 3:10 (bottom right)

[Christensen]

I put in 10k into various assets this time last year and flipped into six figures within a year and some months and still going. I’ve always been an advocate of investing because it has been rather rewarding. I hope to attain financial freedom soon. One more thing, I always look forward to your content brother, keep up the good work.

[gamerx]

you can actually hear someone say "what?!" after nixon temporarily dissolves the gold standard.

[zotac]

Can you expand on the issues why china artificially devalued their currency that would be highly interesting 😁.
Following u for about 6 months now and not one ( NONE) of your videos were sub par . So great job man and lots of love 😍.

[jadenephrite]

Regarding 5:03, the Bretton Woods Conference in July 1944 did not occur in Bretton Woods, Washington. Instead it occurred in Bretton Woods, New Hampshire at the Mount Washington Hotel.

[RobertBrown..]

There is potential for considerable wealth increase with the correct strategy. I want to know; How can one take advantage of compound interest and potentially grow your retirement savings/net-worth to about $3M over time?

[Adam-ocpq]

anyone else impressed with the parking skills of the person at 3:14?

[DaseRowin]

Not a video essay without mentioning the Toyota Corolla :D

[SangoProductions]

Actually, Chinese manufacturers *are* interested in being paid in foreign currencies. But yes. We see the point you're intending to get at.

[matth]

I absolutely love your videos. Your channel is blowing up and it is absolutely deserved. Keep up the fantastic educational content. Your videos should be showed in school courses on economics.

[connorsamsky]

Bretton Woods is located in the state of New Hampshire, not Washington.

[olivergregory]

Don’t stop. Keep pushing. Until you can win. Because you can win

[stambeto]

To begin with, your content is just amazing. You kept my attention and curiosity throughout the whole video. The way you explain things is so good that even though I have never studied economy in any way, I still understood how the forex works. Now I'm really interested in learning more about the economy and how money works. Keep up the good work!

[mattr]

"Derivatives" flashbacks to calculus

[Junior-zfyy]

3:14 accolades to that yellow car. Performed that tight parallel park so well.

[jadenephrite]

Regarding 12:38, “One pound sterling was exchangeable for one pound of sterling silver.” That was originally from 760 AD when Anglo-Saxon King Offa of Mercia had one troy pound weight of sterling silver weighing the equivalent of 373.242 grams coined into 240 sterling silver pennies. However 1, 056 years later during The Great Recoinage of 1816, the Royal Mint recoined one troy pound weight of sterling silver into 66 shillings which were 792 sterling silver pennies having a total worth £3.3. Therefore a distinction needs to be made between a troy pound weight of sterling silver versus a pound sterling unit of currency.

[babitabajaj]

Dude i am learning about economics more from you than what is taught by my school books and teachers! Keep up.the good work

[munobatoor]

literally one of the best videos I ever watched, you explained all those so beautifully and every single person who watch this video will understand it. thank you much