Euro money market
What is euro money market?
This is the money market for borrowing and lending currencies held as deposits in banks outside the country where they are legal tender. It is often used by institutions who wish to circumvent domestic regulations on certain transactions.
Where have you heard about euro money market?
It's sometimes known as the eurocurrency market, but that doesn't mean it only includes the euro or EU countries. It functions in financial centres around the world.
What you need to know about euro money market.
This eurocurrency market has its roots in the years following the Second World War. The Marshall Plan saw the US send billions of dollars to help rebuild western European economies following the lengthy conflict. The market first developed in London before spreading to other countries. It is important to be aware that interest rates on deposits in the eurocurrency market are often higher than those in domestic markets, as the deposits are not protected by national laws or government guarantees. However, this means interest rates on loans are frequently lower, for the same reasons.
Find out more about euro money market.
The market may be used by institutions who want to avoid caps on interest rates under domestic laws.