Money and its functions

Currency Trading (Foreign Exchange)
As a consequence of buying and selling between people or entities in different countries, there was a need for developing a system for exchanging one nation’s currency for another’s. During the 17^th and 18^th centuries, Amsterdam was home to the world’s first currency exchange market that enabled international buyers to transact their deals in an official manner.
The foreign exchange, or forex, market is now the largest financial market in the world in terms of the value of all the trading done each day – much larger than any of the world’s stock or bond markets. This is because, in order to conduct business worldwide, it is necessary for companies, individuals, and governments to exchange billions in various currencies every trading day. Forex has become an increasingly popular asset class with investors.
Related Readings
CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional CFI resources below will be useful:

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  Forex Trading – How to Trade the Forex Market
  
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  Foreign Exchange Gain/Loss
  
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  Gold Standard
  
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  Paper Economy
  

What is the Paper Economy?
The paper economy, or financial economy, refers to the part of the economy that is made up of non-real or financial variables. All transactions and activities in the paper economy take place on paper, i.e., there is no exchange of real goods and services.

Consider the following example: Investor A buys $10,000 worth of bonds from Bank A. Investor A transfers $10,000 to Bank A and the bank transfers the bonds to the investor. No real goods are exchanged. Investor A simply receives a piece of paper from Bank A that says that a certain number of bonds are now in his name. Within the paper economy, all claims on assets are through documents.