What is Euro-Currency market?


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Euro – Currency market can be described as an international financial market which
specializes in borrowing and lending of currencies, from/to residents and non-residents,
outside the country of issue of the currencies. This market therefore consists of specific
banking operations of accepting deposits and giving how loans in non-resident currencies.
Such deposits and loans are called Euro- US Currency deposits /credits and the banks
undertaking the transactions are called Euro-banks. The locations where Euro-banks
undertake such transactions are called Euro-Currency markets.
ORIGIN:
A deposit in USD created outside USA becomes a Euro-Dollar deposit; a deposit in GBP
created outside UK would be called a Euro-Sterling deposit, etc. The concept of Euro-
Currency transactions started in Europe. Over a period of time, this financial activity has
spread to different locations in the world and is now referred to as the ‘Offshore’ market.
(‘Euro’ used as a prefix indicates an ‘Offshore’ transaction)


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