abhishreshthaa
Abhijeet S
Euro currency Markets
While opening up of the domestic markets began only around the end of seventies, a truly international financial market had already been born in the mid-fifties and gradually grown in size and scope during sixties and seventies. This refers to the well-known ‘Eurocurrencies Market’. It is the largest offshore market.
Prior to 1980, Eurocurrencies market was the only truly international financial market of any significance. It is mainly an inter-bank market trading in time deposits and various debt instruments. What matters is the location of the bank neither the ownership of the bank nor ownership of the deposit. The prefix "Euro" is now outdated since such deposits and loans are regularly traded outside Europe.
Over the years, these markets have evolved a variety of instruments other than time deposits and short-term loans, e.g. certificates of deposit (CDs), euro commercial paper (ECP), medium- to long- term floating rate loans, eurobonds, floating rate notes and euro medium-term notes (EMTNs).
The main factors behind the emergence and strong growth of the Eurodollar markets were the regulations on borrowers and lenders imposed by the US authorities which motivated both banks and borrowers to evolve Eurodollar deposits and loans.
Added to this are the considerations mentioned above, viz. the ability of euro banks to offer better rates both to the depositors and the borrowers and convenience of dealing with a bank that is closer to home, who is familiar with business culture and practices in Europe.
While opening up of the domestic markets began only around the end of seventies, a truly international financial market had already been born in the mid-fifties and gradually grown in size and scope during sixties and seventies. This refers to the well-known ‘Eurocurrencies Market’. It is the largest offshore market.
Prior to 1980, Eurocurrencies market was the only truly international financial market of any significance. It is mainly an inter-bank market trading in time deposits and various debt instruments. What matters is the location of the bank neither the ownership of the bank nor ownership of the deposit. The prefix "Euro" is now outdated since such deposits and loans are regularly traded outside Europe.
Over the years, these markets have evolved a variety of instruments other than time deposits and short-term loans, e.g. certificates of deposit (CDs), euro commercial paper (ECP), medium- to long- term floating rate loans, eurobonds, floating rate notes and euro medium-term notes (EMTNs).
The main factors behind the emergence and strong growth of the Eurodollar markets were the regulations on borrowers and lenders imposed by the US authorities which motivated both banks and borrowers to evolve Eurodollar deposits and loans.
Added to this are the considerations mentioned above, viz. the ability of euro banks to offer better rates both to the depositors and the borrowers and convenience of dealing with a bank that is closer to home, who is familiar with business culture and practices in Europe.