What does eurodollar mean?
A eurodollar is a United States dollar that is held on deposit in a bank located outside the United States, most commonly in major financial centres such as London, Singapore or Hong Kong. By extension, 'eurodollars' refers to the vast offshore market in which these deposits are borrowed and lent, free from American banking regulation. Despite the name, the word has nothing to do with the euro currency — it arose in the 1950s, long before the euro existed, when Communist bloc governments began keeping dollar accounts in Western European banks rather than in New York. Today the eurodollar market is one of the largest and most important in international finance: it allows banks, corporations and governments to move and borrow dollars efficiently across borders, and instruments such as eurodollar bonds and futures contracts are central to global interest-rate trading. The term is technical, appearing mainly in economics, banking and investment contexts rather than casual speech.
nounA eurodollar is a US dollar held on deposit in a bank outside the United States, especially in Europe. The term also refers collectively to the market in which such offshore dollar deposits and loans are traded.
- A US dollar deposited in a bank located outside the United States.
- The eurocurrency market dealing in such offshore dollar deposits and loans.
"The bank raised capital by issuing eurodollar bonds in London."
"Corporations often hold eurodollars to take advantage of interest rates outside American jurisdiction."
"Trading in the eurodollar futures contract is among the most liquid in the world's financial markets."
Countable and regularly pluralised, though frequently used attributively in its singular form.
"Billions of eurodollars flow through offshore markets every day."
Despite the name, a eurodollar isn't European money at all — it's an American dollar sitting in a bank account anywhere outside the US, and the market it created reshaped global finance.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Etymology of eurodollar
The term combines 'euro-' (from Europe) with 'dollar', first arising in the 1950s when Soviet-bloc countries, wary of having their dollar reserves frozen in American banks, deposited them instead with banks in London and Paris. Although rooted in that European origin, the prefix soon became generic for any offshore dollar deposit worldwide, and parallel terms such as eurocurrency, eurobond and petrodollar followed the same pattern. The word thus reflects a mid-twentieth-century shift of dollar activity beyond US regulatory reach rather than any connection to today's euro.
Related word forms
How eurodollar is actually used
The term is technical and belongs to finance and economics register; it is not used in everyday conversation. Despite the 'euro' element, it predates the euro currency and applies to dollars held anywhere abroad, not only Europe.
Easily confused with eurodollar
A eurodollar is a US dollar held outside the United States, whereas the euro is the official currency of the Eurozone — they are entirely different currencies.