The Eurocurrency Market. C) Describe the basic functions of the Eurocurrency markets

C) Describe the basic functions of the Eurocurrency markets.

B) Sum up the text in 5-7 sentences. Present your sentences to the class.

Ex. 11. a) Fill each gap with a suitable word from the box.

function	conducted	restrictions
fry	need	organized
borrow	offer	perform
deal	leading	client
bank	borrowers	operating

One of the most well-developed sectors of the Global Financial Market is the Eurocurrency Market. The Market refers to funds channelled via financial intermediaries from international lenders to international________. The large multinational banks dominate this business and have played a________role in the development and growth of these "offshore" markets.

The Eurocurrency markets_________the short to medium term debt required by banks, corporate customers, and government borrowers. The sources of these funds are domestic _________ deposits whose ownership is transferred to banks outside the controlled domestic monetary systems.

The Eurocurrency market is therefore_________and sustained by the large international banks and operates at two levels. Firstly, there is the very competitive wholesale market_________in London, in which these banks sell their funds to each other at the London interbank offering rate (LIBOR). This business is mainly________ via telephone, and thus only the highest quality banks can________ in the wholesale market. Secondly, smaller banks, corporate borrowers, national governments (in the late 1970s from Eastern Europe or developing countries and now primarily the Western industrialized countries) can_________loans from this market. In this large-scale "retail" loan market the large international banks only lend the offshore deposits after detailed credit investigation of the The Eurocurrency markets _________ three basic functions.

Firstly, they are extensively used for foreign exchange hedging purposes as the banks_________to balance out their foreign assets and liabilities. The banks therefore take positions in the Eurocurrency market to cover the forward commitments they have made with their customers. Secondly, Eurocurrency markets can at times bypass domestic channels of financial intermediation, especially when governments impose tight credit _________. For example, US corporations can acquire Eurodollars in London. These deposits may be US domestic dollar deposits that have been transferred abroad, during a US domestic credit squeeze. The third_________is the full international intermediation role of channelling surplus liquid resources from, say, OPEC countries to those countries or corporations who________to borrow.

Words you may need:

via через, посредством

to take position устанавливать позицию

at times по временам, время от времени

bypass v обходить

credit squeeze «сжатие кредита» (мероприятия государства по ограничению кредита потребителям)

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