What does eurocurrency mean?
Eurocurrency is a term from international finance describing any currency held or deposited in a bank outside the country that issued it. The classic example is the eurodollar — American dollars deposited in banks in London or other financial centres beyond the reach of United States regulators. Despite the name, neither Europe nor the euro is involved; the prefix simply reflects the market's origins in mid-twentieth-century Europe. Eurocurrency deposits gave rise to the eurocurrency market, a vast offshore system in which banks lend and borrow currencies free of many domestic rules such as reserve requirements and interest-rate ceilings. Because of this lighter regulation, eurocurrency markets offered higher returns to depositors and cheaper credit to borrowers, fuelling their rapid growth after the 1950s. Today the term appears mainly in economic history and older financial literature, having largely given way to phrases like 'offshore deposits' and 'offshore dollar market', but it remains essential vocabulary for understanding how modern global money markets developed.
nounA currency held or deposited in a bank located outside the country that issued it, especially US dollars held in European banks. Such deposits form the basis of an offshore money market operating largely free of domestic regulation.
- Currency deposited in a bank outside the country that issued it, forming the basis of the offshore (eurocurrency) market.
"The bank raised much of its capital through eurocurrency deposits held in London."
"London grew into the world's leading centre for eurocurrency trading during the 1960s."
"Because eurocurrency transactions fall outside domestic banking rules, they are subject to less regulatory oversight than onshore deposits."
The plural exists but is uncommon; the singular is normally used as an uncountable mass noun referring to the market or the class of deposits.
"The bank dealt in a range of eurocurrencies, including dollars, marks, and sterling."
Despite its name, a eurocurrency need have nothing to do with Europe or the euro — a 'eurodollar' can sit in a bank in Singapore or Tokyo.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Etymology of eurocurrency
The word combines the prefix 'Euro-' with 'currency' and was coined in the late 1950s to describe US dollars deposited in European banks, particularly London, outside the jurisdiction of American monetary authorities. The underlying element 'Euro-' derives ultimately from Greek 'Euros', the name of the continent Europe. As the phenomenon spread to financial centres in Asia and elsewhere, the term broadened to cover any currency deposited outside its country of issue.
Related word forms
How eurocurrency is actually used
The term is technical and belongs to finance and economics; it is largely historical now, as modern usage favours terms like 'offshore deposits' or the 'offshore dollar market'. Despite the prefix 'euro-', the word applies to any currency and any region. Often found attributively, as in 'eurocurrency market' or 'eurocurrency loan'.
Easily confused with eurocurrency
The euro is the official single currency of the eurozone, whereas eurocurrency refers to any national currency deposited outside its home country — it has nothing to do with the euro itself.