The Vault, March 2011: Exchange rates exposed!
In this issue of The Vault, we look at global currencies, how exchange rates are set, and why it matters to you.
Share The Vault with a friend!
Love The Vault? Send it to a friend or share it on Facebook using the buttons at the upper right. Help your friends learn about money and business!
It’s all relative
Money used to be made of precious metals like gold and silver. After a few thousand years, people started using paper notes that represented gold held in vaults. This was called the “gold standard.” This system broke down after World War II. Today, currencies are backed by—well, by nothing, except people’s faith in them. Most transactions are digital, and exchange rates today are not set by authorities. They are set by markets. The only way to move an exchange rate is by buying or selling lots of a particular currency.