MacroAdvanced#Global Finance#Banking
Eurodollar System
E
Definition
A Eurodollar is a US-dollar deposit booked at a bank outside the United States; the term describes the location of the bank, not the nationality of the depositor or bank.
Source reviewed
- BIS Quarterly Review: A shift in London's eurodollar market opens in a new tab
Supports: The BIS defines a Eurodollar as a US-dollar deposit at a bank located outside the United States and explains that bank location, not the nationality of the bank or depositor, is decisive.
- Federal Reserve: International banking definitions opens in a new tab
Supports: The Federal Reserve's international banking manual defines Eurodollars and describes deposits held outside the country issuing the currency.
- Federal Reserve: Eurocurrency liabilities opens in a new tab
Supports: The Federal Reserve describes how some balances due to non-US offices remain within the US regulatory reporting framework, so offshore is not a synonym for unregulated.
Concept Diagram
Key Takeaways
1
A Eurodollar is a US-dollar deposit at a bank outside the United States; it is not a separate currency or necessarily European.
2
The bank's location, rather than the nationality of its customer or owner, is central to the definition.
3
International dollar funding is shaped by several institutions, rules, and market conditions; offshore does not mean unregulated.
4
A Eurodollar measure alone cannot forecast the dollar, Bitcoin, or any other asset.
Practical Example
A company holds a USD time deposit at a bank in London. That deposit is a Eurodollar because the accepting bank is outside the United States. It does not, by itself, establish the company's risk, the bank's supervision, or the likely direction of Bitcoin.
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