Eurodollars and Negotiable CDs constitute short-term borrowing by banks to acquire funds for general use.
Hence, the default risk would vary little between instruments, and any relative change in spreads among negotiable CDs, EDs, financial CP, and BAs would be a function of a change in the liquidity premium, ceteris paribus.
Negotiable CDs are not covered by FDIC deposit insurance, so CD rates reflect the default risk of the issuing bank.
We also obtain daily money-market rates for three-month negotiable CDs, three-month ED deposits, and three-month financial CP from the Fed's Board of Governors.
The data for outstanding negotiable CDs are not available, so we use large time deposits as our proxy for the size of the CD market.
LaRoche (1993) notes that a change in Federal Reserve regulations at the end of 1990 led to a structural change in the relation among BAs, negotiable CDs, and EDs.