Eurocurrency

international monetary system

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Last updated

June 26, 2026

Quick Summary

The term Eurocurrency refers to a currency deposited outside its country of origin, with the U.S. dollar being the most common. This practice began in the 1960s when Eastern European countries deposited dollars in European banks, leading to the development of the Eurodollar market.

These Eurodollars are held as balances with U.S. banks and are used to finance trade. The Eurocurrency market, often referred to as the Euromarket, is a global network for short-term lending and borrowing of these currencies. It operates on narrow margins, often offering more favorable interest rates than traditional domestic markets, and does not directly involve foreign exchange transactions. This market plays a significant role in international finance and can indirectly influence exchange rates.123

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Eurodollar
…which are generally known as Eurocurrency. The name originated in the early 1960s when eastern European countries wishing to hold dollar deposits outside the United States deposited them in European banks. Later the market involved many non-European countries.
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…which are generally known as Eurocurrency. The name originated in the early 1960s when eastern European countries wishing to hold dollar deposits outside the United States deposited them in European banks. Later the market involved many non-European countries.
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international payment and exchange
Short-term flows
…in what are known as Eurocurrencies, of which much the most important was the Eurodollar. The prefix Euro is used because initially the market largely centred on the countries of Europe, but it has by no means been confined to them. Japan and the Middle Eastern oil states have been…
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…in what are known as Eurocurrencies, of which much the most important was the Eurodollar. The prefix Euro is used because initially the market largely centred on the countries of Europe, but it has by no means been confined to them. Japan and the Middle Eastern oil states have been…
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