Further development of such means of exchange like gold and silver gave rise to metal coins and consequently paper money which became very popular and common in stabilized and grown economies. This was actually introduced in the middle Ages and forms the basis of the today’s modern means of exchange.

Inadequate and uneven supply of paper money, because of lack of backing by gold resulted in a mammoth inflation and various other problems. Consequently, foreign exchange virtually became inaccessible and useless. Therefore, foreign exchange controls and organizations were set up to overlook the economies breaching the laws and regulations of paper money supply and setting the standards as well. This lowered down the irresponsibility of economies to print paper money according to their wish.

Later, after the World War II many organizations were settled up to overlook and control the world’s money and setting rules and regulations for it. Organizations like International Monetary Fund (IMF), World Bank, General Agreement on Tariffs and Trade were established to strictly enforce some rulings to the world’s money. These organizations helped stabilize the world’s money which was one of the reasons for the war. The agreement of Bretton Woods initiated in July 1944. This agreement finally resulted in the proposal of fixed exchange rates throughout the countries of the world with respect to US Dollar. But the idea of this agreement could not live longer and the system introduced by European Economic Community was launched. Events took place in the first half of 20th century were also the reasons for the devaluation and destabilization of the US backed exchange rate.

Even after facing so much hurdles and bumpy scenario, commercial companies had face much stabilized and reliable currency environment in past and financial institutions are playing very active role in today’s currency stabilization and foreign exchange rate.