4 ms·
First, a Eurodollar is a USD that is deposited outside of the US. As such it's interchangeable and indistinguishable from a USD. US banking regulations don't
by lottin 4y ago
First, a Eurodollar is a USD that is deposited outside of the US. As such it's interchangeable and indistinguishable from a USD.
US banking regulations don't apply to these dollars? Well, of course, because US banking regulation only apply in the banks in the US. Banks that are located outside of the US are subject to whatever regulation is in place in the location that they're at. Does that mean that Eurodollars are unregulated? No, it doesn't.
Second, currencies don't have interest rates. Only debt instruments do. I have no idea what you're talking about when you say that Eurodollars and US dollars have different interest rates.
- Karrot_Kream 4y agoBecause eurodollars have fewer regulations (for good and for bad, such as FDIC reserve requirements) around them, eurodollar deposits can generate higher interest rates than equivalent USD-denominated deposits. Saying a eurodollar is identical to a USD is a stretch as regulatory regimes, and as such risk, are different between them.
- lottin 4y agoI don't know that they have fewer regulations. Banking regulations follow the guidelines set by the Basel Committee on Banking Supervision and as a result are very much the same across the developed world. Also it's absolutely not true that looser regulations result in higher interest rates.