ABSTRACT
The markets in which foreign currency deposits are transacted are Euro-currency markets, the largest of which is the Euro-dollar market. 'Euro-dollar deposits' refers to US dollar deposits transacted outside the US. Banks located in Euro-centres intermediate deposits between sources and uses, either of which might consist of other banks or non-banks such as governments, corporations and private individuals. Euro-currency activity was originally confined to European banks' foreign currency positions which represented claims on, and liabilities to, bank and non-bank residents and non-residents. The development of the Euro-currency markets was subsequently fostered by both private and official attempts to exploit domestic financial rigidities. The unregulated nature of Euro-currency activity might directly, or indirectly through the generation of deregulatory pressures, undermine the stability of national capital markets. The market's role in the 1973 dollar crisis, in contrast, was more significant, as is reflected in changes in aggregate reporting positions and the positions of US banks' foreign branches.
