The Eurocurrency Market

One of the most well-developed sectors of the Global Financial Market is the Eurocurrency Market. The Market refers to funds channelled via financial intermediaries from international lenders to international_____. The large multinational banks dominate this business and have played a____ role in the development and growth of these "offshore" markets.

The Eurocurrency markets____ the short to medium term debt required by banks, corporate customers, and government borrowers. The sources of these funds are domestic _____ deposits whose ownership is transferred to banks outside the controlled domestic monetary systems.

The Eurocurrency market is therefore______ and sustained by the large international banks and operates at two levels. Firstly, there is the very competitive wholesale market _____ in London, in which these banks sell their funds to each other at the London interbank offering rate (LIBOR). This business is mainly_____ via telephone, and thus only the highest quality banks can _____ in the wholesale market. Secondly, smaller banks, corporate borrowers, national governments (in the late 1970s from Eastern Europe or developing countries and now primarily the Western industrialized countries) can_____ loans from this market. In this large-scale "retail" loan market the large international banks only lends the offshore deposits after detailed credit investigation of the _____.

The Eurocurrency markets three basic functions. Firstly, they are extensively used for foreign exchange hedging purposes as the banks to balance out their foreign assets and liabilities. The banks therefore take positions in the Eurocurrency market to cover the forward commitments they have made with their customers. Secondly, Eurocurrency markets can at times bypass domestic channels of financial intermediation, especially when governments impose tight credit ______. For example, US corporations can acquire Eurodollars in London. These deposits may be US domestic dollar deposits that have been transferred abroad, during a US domestic credit squeeze. The third is the full international intermediation role of channelling surplus liquid resources from, say, OPEC countries to those countries or corporations who______ to borrow.

Words you may need:

Англiйский варiант	Росiйський варiант	Український варiант
via	через, посредством	через, за допомогою
to take position	устанавливать позицию	встановлювати позицію
at times	по временам, время от времени	по часах, час від часу
bypass	обходить	обходити
credit squeeze	«сжатие кредита» (мероприятия государства по ограничению кредита потребителям)	«стиснення кредиту» (заходи держави щодо обмеження кредиту споживачам)

Discussion

Ex. 10.

a) Read the text and single out its main facts.