The Evolution of Foreign Exchange Markets in the Context of Global Crisis

The FX market is the world’s largest financial market. The global financial system involves effective and efficient exchange of currencies. Corporations and investors participate in the market for operational needs: to reduce risk by hedging currency exposures; to convert their returns from international investments into domestic currencies and to make cross-border investments and raise finance outside home markets. Central banks participate in the market. This paper analyzes foreign exchange markets activity before and under the condition the global crisis. The method of research is the comparative analysis used on the global and European level. The research is important and actual because it reveals the changes which have defined a new paradigm for the foreign exchange markets and which contributed to the increasing of the global foreign exchange market turnover during the global crisis. The main conclusion of the paper is that the innovative developments in electronic trading technology and institutional trading arrangements are behind the evolution of the foreign exchange markets. The analysis is supported by statistical tables and uses the recent official Bank for International Settlements and European Central Bank statistic databases