Eurodollars

(redirected from Eurodollar)
Also found in: Dictionary, Thesaurus, Financial, Wikipedia.
Related to Eurodollar: Eurodollar Bond, Eurodollar Deposits

Eurodollars

 

temporarily free currency in US dollars deposited by organizations and individuals of capitalist countries in European banks and used by the banks for allocation of credits.

The volume of the Eurodollar market grew from $1 billion at the end of 1959 to $50 billion by the end of 1971 (according to data from the Bank for International Settlements, in Basel). The rapid expansion of the Eurodollar market is explained by the profitability of depositing dollar resources in European banks (in the US, interest rates on bank deposits are restricted), as well as by the desire of capitalist banks and firms and especially of international monopoly associations to be involved in a capital market free from the control of their governments and central banks. The Eurodollar market consists of several hundred intermediary banks, the majority of which are in London. In 1971 more than 200 foreign banks in London were actively participating in the market. In the 1960’s many branches of US banks were opened in Europe for participation in the Eurodollar market. The market deals mainly in short-term credits (from one to six months). From 1965 to 1968 long-term credits (from three to eight years) also began to be allocated.

The resources of the Eurodollar market come from 40 to 50 countries. In 1968, Switzerland accounted for about 17 percent of the total amount of deposits; Italy, 10 percent; Great Britain, 9 percent; France, 7 percent; the remaining European countries, 18 percent; the US, 8 percent; countries of the Near East, 8 percent; Latin America, 6 percent; and other countries, including Canada, 17 percent. In terms of utilization of resources of the Eurodollar market, the US (over 30 percent) was in first place, followed by Great Britain (14 percent).

The Eurodollar market, which is based on mobile bank credit, has become an important part of the international currency system. It is utilized by capitalist states as a source of funds for temporarily covering deficits in payments balances and for replenishing national monetary markets; it is also used for profitable investment of resources by countries with favorable payments balances. At the end of the 1960’s and the beginning of the 1970’s the enormous growth of the Eurodollar market fed the inflation in Europe and was one of the main reasons for the aggravation of the currency crisis and the devaluation of the dollar (December 1971).

E. D. ZOLOTARENKO

References in periodicals archive ?
Using a variety of Eurodollar options with different interest rate thresholds, we can construct the market-implied distribution of possible outcomes for future interest rates at a given horizon.
For most attorneys, indeed for most people, the words Eurodollar or Eurocurrency probably bring to mind the transnational currency introduced in 1999 and currently used as the medium of exchange in eighteen European nations.
The Eurodollar System, by Paul Einzig, New York: St Martin's Press, 1967, p.
He helped found Eurodollar as Swan National in 1973.
LIBOR is an index or snapshot of the eurodollar market at a particular point of time.
In addition, if an applicable treaty contains a limitation-on-benefits article and the IRS determines that it is not met, offshore finance subsidiaries that borrow on the Eurodollar market may not use the regulations to obtain derivative benefits for the European investors, even if those investors would otherwise qualify for the PIE.
In all cases, the lenders are funding their loans in the Eurodollar markets.
This list extends further back,(3) and is certain to continue into the future, but with what alarming regularity and with what detrimental impact on the Eurodollar market(4) and its participants?
Eurodollar accounts, however, are not subject to such reserve set-asides.
CME Group (NASDAQ: CME) has reached a trading volume record for Eurodollar options with 4,279,584 contracts, surpassing the previous record of 3,493,675 set on June 24, 2013, the company said.
In line with expectations, the Eurodollar commenced the week by recovering a proportion of the 160 pip losses suffered after dovish comments from ECB President Mario Draghi on Friday.
Borrowings under the New Senior Secured Credit Facilities bear interest at the Eurodollar rate plus 3.