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Euro Dollar Market

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Submitted By tonygitz
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Running Head: GLOBAL FINANCING AND EXCHANGE RATE MECHANISMS

EURO CURRENCY MARKETS Name: Instructor: Course: Date:

Global Financing and Exchange Rate Mechanisms
“International financial markets are a major source of funds for international transactions. Most countries have recently internationalized their financial markets to attract foreign business”.
They include the banks that accept deposits and lend the loans in foreign currencies outside the country of issue. Globalization has enabled harmonization and reduction of barriers for free flow of capital and competition among firms in the markets (Globalization Financial Markets, n.d.).
Dollars deposited in U.S. banks are called Eurodollars, while Japanese yen deposited in Europe are called Euro yen. Eurodollars is the most common currency which makes economists to refer it as Euro currency. It can be defined as dollar dominated deposits in other parts of the world except the United States while others define it as dollar dominated deposits in the European banks. This means that the Euro dominated currency is the U.S. dollar, but recently Euro has also become more dominating in the Euro currency loans due to the dollar losing value (Globalization Financial Markets, n.d.).
Euro currency is considered efficient, large and well organized; it is used to fund multinational business operations as well as holding their excess liquidity. In fact the newly introduced “Eurobond markets” has developed a source of funds to the multinational corporations.
Major sources of Euro dollars are dollar reserves, foreign governments, oil exporting countries, business executives holding dollars outside the

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