Word: eurodollars
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...billion Eurodollar pool, fed by 17 years of U.S. balance of payments deficits, is deposited mostly in European banks or foreign branches of U.S. banks. Its funds flow freely from one country to another; there is no official bookkeeping, and no one can be sure how many Eurodollars are currently available for investment. But when they are available, they can be invested anywhere in any amount without interference by any government...
...must take stern action against the balance of payments deficit, they could only be taken aback at the extent of what Paris' Les Echos called Johnson's "anti-Marshall Plan." The cut off of dollars will curtail industrial expansion on the Continent by forcing interest rates up (Eurodollar bond-yield rates climbed 1%, to 7.2%, last week). Declining tourism and tougher competition from U.S. exporters are considered likely to depress business revenues. Italy expects the U.S. controls to tip its precarious balance of payments from surplus to deficit. Japan and Britain foresee a slowdown in trade-and resulting...
...reason, as bankers figure it, is that short-term money in France earns 5% to 51% , less by as much as a percentage point than dollars have been earning on the Eurodollar market or in the U.S. Thus, French bankers have been turning in francs for dollars to invest at a higher rate of interest. These rates, plus heavy summer spending abroad by French tourists and a seasonal increase in French imports this fall, have created a "technical" weakness in the franc...
Among Friends. Eurodollars are handled by about 500 banks in Europe, a few informal phone calls among banking friends usually being enough to settle a major deal. There is often a relay of three or four banks between lender and borrower, which is one cause of criticism of the system. Another complaint is that Eurodollar operators violate a cardinal banking rule by borrowing short term and lending long term, but in fact E$ are mostly used for short-term financing of imports and exports. The Deutsche Bank Managing Director Hermann Abs dislikes the system so much that he will have...
Last week two American firms, the First National City Bank of New York and White, Weld & Co., investment bankers, made a major, joint innovation in the Eurodollar market. They introduced in London the certificate of de posit, which has been so successful in the U.S. since its creation in 1961 that it now accounts for 35% of all interestbearing deposits. With the minimum for C.D.s set at $25,000, the plan opens up the Eurodollar market to people operating on a much smaller scale. And since the certificates are negotiable, the depositor will not have his money frozen...