A Eurodollar is, in its most basic definition, a deposit of U.S. Dollars in a bank outside of the United States. This means that the deposits aren't under the jurisdiction of the Federal Reserve and are subject to less regulation than those found within the United States.
The term Eurodollar relates to all American dollar deposits in any other country other than the United States, not just Europe. Neither should they be confused with the European currency Euro. This means that the euro prefix is only there in order to specify that the deposits are not in their official country of origin, not to suggest that the currency is different from the United States dollar. This means that a Euro dollar is equal to an American dollar.
As a result of the Marshall plan and imports of goods into the United States, the amount of American currency outside of the country of origin dramatically increased after World War 2. Meaning deposits of United States dollars were apparent in many foreign banks.
During the period of the cold war, the Soviet Union was worried that their deposits of American dollars in North American banks would be frozen. In order to ensure this didn't happen, $800,000 was transferred to the Moscow Narodny bank, which was a soviet-owned bank with a British charter. The British banks then deposited the money in the United States banks. This meant that the money could not be frozen, as it didn't belong directly to the soviet-union. These deposits became the first Eurodollars, originally named euro bank dollars.
The term Eurodollar relates to all American dollar deposits in any other country other than the United States, not just Europe. Neither should they be confused with the European currency Euro. This means that the euro prefix is only there in order to specify that the deposits are not in their official country of origin, not to suggest that the currency is different from the United States dollar. This means that a Euro dollar is equal to an American dollar.
As a result of the Marshall plan and imports of goods into the United States, the amount of American currency outside of the country of origin dramatically increased after World War 2. Meaning deposits of United States dollars were apparent in many foreign banks.
During the period of the cold war, the Soviet Union was worried that their deposits of American dollars in North American banks would be frozen. In order to ensure this didn't happen, $800,000 was transferred to the Moscow Narodny bank, which was a soviet-owned bank with a British charter. The British banks then deposited the money in the United States banks. This meant that the money could not be frozen, as it didn't belong directly to the soviet-union. These deposits became the first Eurodollars, originally named euro bank dollars.
