Word: eurodollars
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Dates: during 1960-1969
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Today the Eurodollar market has expanded into a wholesale operation on a global scale. It involves roughly 500 banks in 40 countries. The banks accept deposits (minimum: $25,000) and arrange loans (usually from $100,000 up) among one another and with their customers over a telephone and Telex network. Fed most years by continuing U.S. payments deficits, the pool of money has grown geometrically from $8 billion in 1964 to $16 billion in 1967 to $27 billion at the end of April...
...Eurodollars create a mixture of benefits and headaches. On the plus side, they provide a vital source of private capital to finance world trade and the growth of international corporations. They bankroll oil exploration, highway construction and even occasional European government deficits. Without them, Europe would lack the investment capital to sustain its present Dace of economic growth. The Eurodollar pool has also become a leading haven for nervous money. Fearful of devaluation, individual speculators and treasurers of large corporations swap comparatively weak currencies like British pounds or French francs for Eurodollars...
...government controls the supply of Eurodollars; nor is there any regulation of the interest rates on Eurodollar loans or the uses to which they are put. Thus the expatriate dollars are extraordinarily sensitive to the gyrations of monetary supply and demand. They race across national boundaries in response to tiny changes in interest rates, and their existence complicates government efforts to curb currency speculation. It is hardly surprising that European moneymen have come to regard the Eurodollar as a genie that has somehow escaped from its bottle...
...Eurodollar amounts to a new and highly controversial form of international currency. Last week in Strasbourg, Vice President Raymond Barre of the Common Market warned the European Parliament that Eurodollars have become "one of our continent's top-priority problems...
...immediate reason for the jump to last week's peak was the rush to borrow Eurodollars for conversion into German marks. Big-time speculators found it much easier to borrow on the Eurodollar market than to dig into their own pockets for the money...