Eurocurrency market

(redirected from Eurocurrency Markets)

Eurocurrency market

The money market for borrowing and lending currencies that are held in the form of deposits in banks located outside the countries where the currencies are issued as legal tender.

Eurocurrency Market

The market for investments denominated in currencies other than the one in which the investment is traded. For example, a eurodollar is a U.S. dollar deposit outside the jurisdiction of the Federal Reserve (that is, outside the United States). Eurodollar investments may be traded in any country other than the United States but are usually traded in London. Likewise, a euroyen is a yen deposit outside Japan, thought it usually refers to a euroyen CD. The eurocurrency market may also refer to the trading of eurocurrency bonds. It is important to note that term has nothing to do with the euro, and the prefix "euro-" is used more generally to refer to deposits outside the jurisdiction of the local central bank (e.g. "euroruble").

Eurocurrency market

or

Eurobond market

a MARKET based in Europe, comprising a web of international banks and money brokers, which is engaged in the borrowing and lending of FOREIGN CURRENCIES such as US dollars outside their countries of origin, as a means of financing trade and investment transactions.

The main instrument used in the Eurocurrency market to finance long-term investment is the Eurobond, a form of fixed interest security which is denominated either in a single currency or is syndicated with a lead' bank arranging with other banks a multi-currency loan package. Depositors of funds in the Eurocurrency market include commercial banks, companies and central banks, while borrowers for the most part are industrial and financial companies, particularly MULTINATIONAL ENTERPRISES, who use Eurofinance during times of domestic credit restrictions and/or when domestic interest rates are high in comparison with Eurocurrency rates. See LIBOR.

Eurocurrency market

or

Eurobond market

a market based primarily in Europe that is engaged in the lending and borrowing of US DOLLARS and other major foreign currencies outside their countries of origin to finance international trade and investment.

The main financial instrument used in the Eurocurrency market for long-term investment purposes is the Eurobond (see BOND), a form of fixed-interest security denominated in a particular currency or currencies. Depositers in the Eurocurrency market include commercial banks, industrial companies and central banks. Borrowers for the most part are companies that have resorted to Eurofinance during times of domestic credit restrictions and/or when domestic interest rates have been high in comparison to those prevailing in the Eurocurrency market. See FOREIGN EXCHANGE MARKET.

References in periodicals archive ?
Chang (1992), "Intra-Day Arbitrage Opportunities in Foreign Exchange and Eurocurrency Markets," Journal of Finance 47(1): 429-453.
234) Nations whose currencies are not subject to large Eurocurrency markets are mostly likely to attempt to game the system as they have less to gain by quid pro quo reserve requirements.
In more efficient markets, such as the Eurocurrency markets, forward exchange rates are based on both current and future expectations of the interest rate differential.
We construct an index measure of Eurobank credit risk EurBk for the sets of Eurobanks dealing in the JBA EY TIBOR and BBA [yen] LIBOR Eurocurrency markets.
This eventual exemption from reserve requirements for Eurocurrency liabilities is what has raised the possibility of a settlement effect in LIBOR: Without the 3 percent reserve requirement, reserve deposits that are borrowed in the Eurocurrency markets for settlement purposes are now essentially equivalent to deposits borrowed in the federal funds market.
16] Also, Eurocurrency markets provide liquidity without the political and economic restrictions Fund borrowing entails.
Consequently, short-term funding costs for nearly all Japanese banks increased sharply, as manifested by additional premiums on yen- and dollar-denominated libor deposits that Japanese banks had to pay in order to borrow in the Eurocurrency markets.
Legislation passed in 1977 and implemented in 1978 permitted Mexican banks to open foreign branches, in part to service their increasingly internationalized clientele, in part to tap Eurocurrency markets more effectively.
MILLS, INTERNATIONAL BANKING FACILITIES AND THE EURODOLLAR MARKET 7-9 (1983) (noting that IBFs expand the geographical scope of Eurocurrency markets, increasing the opportunity for unregulated banking transactions without greatly increasing foreign investment in the U.
In the financial sector, initial investment was undertaken in order to serve Japanese companies abroad, engage in foreign exchange business and participate in Eurocurrency markets.
Efforts to stave off stagnation in thc 1970s through more deficits and further monetary expansion, taken together with the emergence of "petrodollars," then led to a veritable explosion of international liquidity through the Eurocurrency markets.