After World WAR II,the Soviets used dollars instead of rubles for foreign trade and had maintained a large inventory of hard currencies,especially the dollar.In order to earn interest on these deposits,the soviets began to lend these deposits to Europeans or to American operating in Europe,thus creating Eurocurrencies.
❖ Eurocurrency markets
2.The cost of funds in this market is based on LIBOR,the London Inter-bank Offer Rate,the rate at which banks in the inter-bank system charge each other for funds of many different maturities
❖ Eurocurrency markets ❖ International Debt Markets-long-term ❖ Short-and Medium-term Debt Markets ❖ International Equities
❖ Eurocurrency markets
1.The Eurocurrency market has been referred to as a stateless vat of money,essentially owing to no allegiance to any nation.It is a huge ,global inter-bank money and capital market that facilitates loans with maturities range from 90 days to 10 years or more and that is almost totally outside all government regulations.
❖ Private international financial institutions global private regional private national private
International financial markets
❖ Eurocurrency markets ❖ International debts markets-long-term
3.Origin of the market A number of reasons have been given for the origin of the Eurocurrency market.Some analysts go so far as to say that the Soviets initiated the process of trading Eurocurrencies before the western Europeans used foreign deposits.
International finance
Foreign direct investment
Inventory of international
Financial resources
1.non-bank financial institution financial resources
2.international financial markets
International derivatives exchange-traded
❖ Users of derivatives/risks of derivatives ❖ Currency futures and options ❖ Interest rate futures and options
❖ International financial markets ❖ International derivatives exchange-traded ❖ International non-exchange traded
derivatives
Non-bank
❖ Public international financial institutions public global financial institutions regional public national public
The global business finance environment
1.introduternational monetary system
the balance of payment 3.the theories of foreign exchange rate determination 4.foreign exchange exposure
global bonds/foreign bonds/eurobonds/special types of bonds ❖ Short-and medium-term debt markets Euro-commercial paper and euro-medium-term notes/floating rate euro-notes ❖ International equities
3.international derivatives exchange-traded
4.nonexchange traded derivatives
Inventory of international financial resources
Yu feng yao
❖ Non-bank financial institutions in global finance
International non-exchange traded derivatives
❖ Currency and interest rate swaps ❖ Inter-bank currency futures and options ❖ Exotic derivatives
International financial markets