NISM Series XIII Common Derivatives Certification Exam Notes
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Transaction Monitoring: Ensures compliance with AML regulations.
Evolution of Foreign Exchange Markets: Currency markets evolved from barter systems to metal coins, gold standards, Bretton Woods system, and finally to fiat currencies and floating exchange rates.
Barter System Limitations: Non-divisibility, transportation costs, and valuation difficulties led to the invention of money as a common medium of exchange.
Gold Standard: Countries valued currencies against gold, with central banks holding gold reserves. E.g., if 1 unit of gold = INR 10,000 and USD 500, then 1 USD = INR 20.
Bretton Woods System: From 1944-1971, all currencies pegged to USD, and USD pegged to gold. Created IMF and World Bank; collapsed in 1973.
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