|
The Eurodollar market
first came into being in the 1950s when the Soviet Union's oil revenue --
all in US dollars -- was being deposited outside the US in fear of being
frozen by US regulators. That gave rise to a vast offshore pool of dollars
outside the control of US authorities. The US government imposed laws to
restrict dollar lending to foreigners. Euro markets were particularly
attractive because they had far fewer regulations and offered higher
yields. From the late 1980s onwards, US companies began to borrow
offshore, finding Euro markets an advantageous place for holding excess
liquidity, providing short-term loans and financing imports and exports.
|
