Explore BrainMass


Explain about eurocurrency

© BrainMass Inc. brainmass.com August 20, 2018, 5:59 pm ad1c9bdddf

Solution Preview

Eurocurrency is money in the form of bank deposits of a currency outside the country that issued the currency.

The use of the prefix "euro" is somewhat misleading. It is used for historical reasons. Eurocurrency deposits may be of any currency in any country.

The most common currency deposited as eurocurrency is the US dollar, and the term eurodollar is often used to refer to dollar deposits.

One advantage of eurocurrency from a bank's point of view is that it allows a bank to operate outside the regulation of the country issuing the currency in question. One particular advantage is that most countries do impose a reserve requirement on foreign currency operations: a bank can therefore lend a higher proportion of its eurocurrency deposits, improving its ...

Solution Summary

Explain about eurocurrency