It therefore decided to move some of its U.S. In another version, the first eurodollar account was created by an English bank in favour of the Soviet Union during the Cold War, following the invasion of Hungary in 1956, as the Soviet Union feared that its deposits in North American banks would be frozen as a sanction. dollar banknotes to the Soviet-owned Banque Commerciale pour l'Europe du Nord in Paris before the United States froze its remaining U.S. In one version, the first eurodollar account was created in France in favour of Communist China, which in 1949 managed to move almost all of its U.S. Various narrations are given of the creation of the first eurodollar account, but most trace back to Communist governments keeping dollar deposits abroad. dollars in American banks, evidenced by certificates of deposit. Some foreign countries, including the Soviet Union, also had deposits in U.S. dollar banknotes were in the custody of foreign banks outside the United States. dollar banknotes outside the United States increased significantly, as a result of both the dollar funding of the Marshall Plan and from dollar proceeds of European exports to the U.S., which had become the largest consumer market.Īs a result, large amounts of U.S. 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.Īfter World War II, the quantity of physical U.S. There is no connection with the euro currency of the European Union. The offshore locations of the Eurodollar make it exposed to potential country risk and economic risk. dollar-denominated deposit in Tokyo or Beijing would likewise be deemed a Eurodollar deposit (sometimes an Asiadollar). 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. Consequently, such deposits are subject to much less regulation than deposits within the U.S. dollars held in time deposit accounts in banks outside the United States, which are not subject to the legal jurisdiction of the U.S. For the currency of the European Union, see Euro.Įurodollars are U.S.
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