The period for settlement of contract between the buyers and sellers of foreign exchange is usually three months. Pssst… we can write an original essay just for you. The exchange rate is in equilibrium and has no tendency to change, when there is equality between demand for and supply of foreign exchange.
On the opposite, if there is an increase in the supply of dollars, the supply function of dollars will shift to the right. This paper currency has no relationship with gold: it does not represent it in any amount, and cannot be converted into it.
In the same way we call utilitarianism the production and distribution system of utilitarian goods existing in a given community vegetal, animal or human. The value of these monetary images is auxiliary-instrumental: they are used to better handle the specific goods which produced them, but they have no intrinsic value.
The fact that many of the bullae discovered up to now carry two different seals gives support to this interpretation.
Even if we shall deal with this matter in more detail in the next chapter, we shall say now that the metal currency has three features which make it completely useless in any attempt of effective documentation; it is anonymous it does not identify the operation agentsit is uniform it does not analyse the features of the operationand it is dynamic, it circulates indefinitely it does not allow any sort of statistics.
This is, indeed, the bankers' job: to create the purchasing power which is lacking on the market, to make possible an additional monetary circulation, when the existing one is not enough.
When things become normal again convertibility may be reestablished. We have now already two permanent monetary circulations, well differentiated from each other: the circulation of specific metal currency; and the circulation of bank notes, which have no intrinsic value, but which represent a permanent promise of conversion into gold, and therefore are based on the trust in the emitting bank, in its ability to face the conversion demands.
Monetary instruments must not be confused neither with the monetary units, nor with market values; but they imply the existence of both of them. This signifies an appreciation of exchange value of the home currency. The forward exchange market is concerned with such transactions of foreign exchange in case of which the contract to buy or sell foreign exchange is signed in the current period but the delivery of foreign exchange takes place at a future date at a price agreed upon in advance.