Banking for Beginners

Recently India has entered into Free Trade Agreements (FTA) with the United Arab Emirates (UAE) and Australia which has brought the spotlight on FTAs. After British PM Johnson’s visit,  there is a buzz of a FTA with UK. Let’s discuss - What are FTAs and what are advantages or disadvantages for the concerned countries and their economies. What are FTAs ? By definition a FTA connotes a treaty between multiple countries (set of two or more) whereby they agree, on a reciprocal basis, to open up access to their respective markets for trade and other economic activities, without restrictive entry barriers or export and import tariffs. To quote Encyclopedia Britannica “ free trade , also called   laissez-faire , a policy by which a government does not discriminate against  imports  or interfere with exports  by applying tariffs (to imports) or subsidies (to exports). A free-trade policy does not necessarily imply, however, that a country abandons all control and taxation  of imports and expo

  US Dollar (USD) is the most accepted currency across the globe although it may not be the strongest in nominal terms. USD ranks as 10 th strongest behind Kuwaiti Dinar (1 st spot), British pound (5 th spot) and the Euro (8 th spot). Despite its relatively low strength, USD is still considered and accepted as the World’s foremost reserve currency.   When US Federal Reserve first issued USD as the nation’s currency in 1914, British Pound was already dominating the globe, in line with Britain’s reigning status as the largest colonial power. However, during World War I (1914-18), the allies ( France ,   Britain ,   Russia ,   Italy ,   Japan ) had to depend on US for supplies (US joined the war in 1917) with payment being made in gold. This made US as the biggest holder of gold reserves and strengthened its currency (since it was backed by Gold reserves) as compared to British Pound which had weakened post war. This in turn led to various countries pegging their currency to USD its