Towards Increasing Complexity: The Evolution of the FX Market

Alain P. Chaboud, Lisa Chung, Linda Goldberg and Anna Nordstrom
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Alain P. Chaboud: https://www.federalreserve.gov/econres/alain-chaboud.htm

No 20240111, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The foreign exchange market has evolved extensively over time, undergoing important shifts in the types of market participants and the mix of instruments traded, within a trading ecosystem that has become increasingly complex. In this post, we discuss fundamental changes in this market over the past twenty-five years and highlight some of the implications for its future evolution. Our analysis suggests that maintaining a healthy price discovery process and fostering a level playing field among participants are areas to watch for challenges. The consequences of the evolution of the FX market—well beyond those anticipated twenty-five years ago—remain active areas of research and policy consideration.

Keywords: foreign exchange; currency; spot market; derivatives; FX Global Code (search for similar items in EconPapers)
JEL-codes: F0 (search for similar items in EconPapers)
Date: 2024-01-11
New Economics Papers: this item is included in nep-mon and nep-mst
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