A major catalyst to the acceleration of Forex trading was the rapid development of the Eurodollar
market; where US dollars are deposited in banks outside the US. Similarly, Euromarkets are those
where assets are deposited outside the currency of origin. The Eurodollar market first came into
being in the 1950s when Russia’s oil revenue - all in dollars - was deposited outside the US in
fear of being frozen by US regulators. That gave rise to a vast offshore pool of dollars outside the
control of US authorities. The US government imposed laws to restrict dollar lending to foreigners.
Euromarkets were particularly attractive because they had far less regulations and offered higher
yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euromarkets
a beneficial center for holding excess liquidity, providing short-term loans and financing imports
and exports.
London was, and remains the principal offshore market. In the 1980s, it became the key center
in the Eurodollar market when British banks began lending dollars as an alternative to pounds
in order to maintain their leading position in global finance. London’s convenient geographical
location (operating during Asian and American markets) is also instrumental in preserving its
dominance in the Euromarket.
market; where US dollars are deposited in banks outside the US. Similarly, Euromarkets are those
where assets are deposited outside the currency of origin. The Eurodollar market first came into
being in the 1950s when Russia’s oil revenue - all in dollars - was deposited outside the US in
fear of being frozen by US regulators. That gave rise to a vast offshore pool of dollars outside the
control of US authorities. The US government imposed laws to restrict dollar lending to foreigners.
Euromarkets were particularly attractive because they had far less regulations and offered higher
yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euromarkets
a beneficial center for holding excess liquidity, providing short-term loans and financing imports
and exports.
London was, and remains the principal offshore market. In the 1980s, it became the key center
in the Eurodollar market when British banks began lending dollars as an alternative to pounds
in order to maintain their leading position in global finance. London’s convenient geographical
location (operating during Asian and American markets) is also instrumental in preserving its
dominance in the Euromarket.
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