GEB 3373 Lecture Notes - Lecture 37: Libor, Eurocurrency, Eurodollar
20 Oct 2016
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Currency exchanges used by exporters & tourists. Most banks also provide investment banking services, as do large securities firms. > package and locate long term debt and equity funding. > arrange mergers and acquisitions of domestic and foreign firms. Competition has forced investment bankers to globalize in order to secure capital for clients at lowest possible cost. 1950s: communist nations in central/eastern europe needed $ to finance international trade but feared that us government would confiscate or black $ holdings in the us banks for political reasons. > found european banks willing to hold accounts for them in $ Other international banks such as canada & japan also held dollars. > dollars held banks outside us came to be known as eurodollars. Eurocurrency: currency on deposit outside its country of issue. Is extremely competitive with lenders operating razor-thin margins. Euroloans often quoted on basis of libor (london interbank offered rate)
