Euro Dollar Market 582d3c

The Euro-Dollar Market

Meaning A euro currency can be termed as a currency used for financial transactions outside the country of its origin. Most Euro currency claims are in Euro dollars which stand for dollar claims on banks outside United States. It bears the same exchange as any ordinary US dollar has in of other currencies. When an America organization deposits/ lends its funds with an American bank in London, it is Euro Deposits/ lending. when the same transaction is conducted in us it will not be a Euro transaction.

Euro-dollars have two basic characteristics:  first, they are short term obligations to pay dollars;  second, they are obligations of banking offices located outside the U.S.

Origin And Growth  Flow

of U.S. Aid  Cold war  Decline in the importance of sterling  Regulation- Q  Other U.S. Measures  BOP deficit in U.S.  Petro-Dollars  Innovative Banking

Features of Euro Dollar Market International

Market Independent Market Wholesale Market Competitive Market Short Term Market Inter Bank Market

Determination of Interest rate Euro currency interest rates are purely determined by the demand and supply factors. Euro currency is away from any government control. Euro currency interest rates are generally akin to the interest rate in the home country. It is because each country’s interest rates influence the Euro currency rates as they are part of an integrated money market.

Instrument of Euro-Market Syndicated Bond

Loan

Issue Note Issuance Facility Commercial Paper Equity related bonds

Role in International Financial System Positive

Effects Adverse Effects Its role in Developing Countries