Eurodollar

Eurodollars are U.S. dollars held in time deposit accounts in banks outside the United States. The term was originally applied to U.S. dollar accounts held in banks situated in Europe, but it expanded over the years to cover US dollar accounts held anywhere outside the U.S. Thus, a U.S. dollar-denominated deposit in Tokyo or Beijing would likewise be deemed a Eurodollar deposit (sometimes an Asiadollar). More generally, the euro- prefix can be used to indicate any currency held in a country where it is not the official currency, broadly termed "eurocurrency", for example, Euroyen or even Euroeuro.

Eurodollars have different regulatory requirements that dollars held in U.S. banks. Eurodollars can be riskier than assets held in U.S. banks, which include at least partial deposit insurance, and as a result, demand a higher interest rate.[1]

The use of Eurodollars has been on a consistent decline.[2]

There is no connection with the euro currency of the European Union.

  1. ^ "THE NATURE OF THE EURODOLLAR" (PDF). Federal Reserve Bank of Richmond. 1998.
  2. ^ "Who Is Borrowing and Lending in the Eurodollar and Selected Deposit Markets?". Federal Reserve Bank of New York. 13 May 2024.