EUROCURRENCY MARKET

Sr.no. Topics Pg.no.

1
Introduction to Eurocurrency 2
Market
2 9
Features of Eurocurrency market
3
Characteristics and functions of 11
Eurocurrency market
12
4
Countries responsible for the
growth of Eurocurrency market
5
Segments of Eurocurrency 17
markets and current scenario
6
Introduction of Libor and Libor 25
Scandals
7 29
Future of Libor
8 31
Conclusion
9 33
Bibliography

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 EUROCURRENCY MARKET

INTRODUCTION TO THE EUROCURRENCY MARKET

With the liberalization in the domestic regulations and globalization of financial

markets abroad, an increasing number of Indian companies are raising funds in
international financial markets. Typically the operations are in Eurocurrency
markets, which provide larger access at competitive cost.

Eurocurrency market is an international capital market which specializes in

borrowing and lending of currencies outside the country of issue. Thus, deposits
in dollars with a bank in London are Eurodollars. Similarly, Japanese yen held by
banks in London are Euro yen, pound-sterling held by banks in Germany is
Eurosterling, and so on. They are all Eurocurrencies. The main centres of
Eurocurrency are London and few other places in Europe. The growth of the
market has extended beyond these limits and now it includes a few centers of Asia
too, such as Singapore and Hongkong.

A Eurocurrency Market is a money market that provides banking services to a

variety of customers by using foreign currencies located outside of the domestic
marketplace. The concept does not have anything to do with the European Union
or the banks associated with the member countries, although the origins of the
concept are heavily derived from the region. Instead, the Eurocurrency Market
represents any deposit of foreign currencies into a domestic bank. For example, if
Japanese yen is deposited into a bank in the United States, it is considered to be
operating under the auspices of the Eurocurrency Market.

In the financial world, Eurocurrency is money that is deposited in foreign banks

outside of a country. When these foreign deposits are called eurocurrency, they
are primarily related to European countries, but over time, eurocurrency has
become a term for any funds deposited in a foreign bank. The term should not be
confused with the monetary unit known as the Euro. From the standpoint of the
domestic bank, eurocurrency refers to funds that are deposited in a currency
different from that country's own currency.

Some speculate that the term eurocurrency earned its kind of colloquial global use
because of the unique diversity of the European continent. Many small countries
are packed into a very small space on the land mass, with various laws and cultures
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meshing and colliding with each other. In modern times, the diversity of Europe
has led to the European Union, and the subsequent Euro, a European unit of money
that serves the entire EU community. In recent years, the national currencies of
most European Union member countries were phased out to make way for the
common Euro.

The extension of the word eurocurrency, which has nothing to do with the Euro,
means that a deposit from an Asian country to an African country would also
qualify as eurocurrency. The financial community has also coined terms for
specific foreign currency deposits, such as the Eurodollar, which also does not
refer to the European currency. A Eurodollar is a deposit of American money still
denominated in dollars that is in a bank outside of the U.S.

It is a market for borrowing and lending of currency at the centre outside the
country in which the currency is issued. It is different than the Foreign Exchange
Market, wherein the currency is bought and sold. Euro is a single currency which
was launched on 1st Jan1999 (With 11 of 15 member countries of the European
Union participating in the experiment). Now Euro is the official currency of 16 of
the 27 member states of the European Union (EU). These 16 states include some
of the most technologically advanced countries of the European continent and are
collectively known as the Euro zone. The states, known collectively as the
Eurozone are Austria, Belgium, Cyprus, Finland, France, Germany, Ireland, Italy,
Luxemberg, Malta, The Netherlands, Portugal, Slovakia and Spain. The currency
is also used in a further five European countries with and without formal
agreements and is consequently used daily by some 327 million Europeans. Over
175 million people worldwide use currencies which are pegged to the Euro,
including more than 150 million people in Africa.

The Euro is an important international reserve currency. Euros have surpassed the
US dollar with the highest combined value of cash in circulation in the world. The
name Euro was officially adopted on 16th Dec 1995. The Euro was introduced to
the world financial markets as an accounting currency on 1 st Jan1999, replacing
the former European Currency Unit (ECU) at a ratio of 1:1.

The currency was introduced initially in non physical forms, such as travellers
cheques and electronic bank in Euro coins and banknotes entered circulation on
1st Jan, 2002. The Euro is administered by the European Central Bank (ECB) based
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 EUROCURRENCY MARKET

in Frankfurt, and the Euro system, comprising of the various central banks of the
Euro zone nations.

One of the factors that make the Eurocurrency Market unique compared to many
other money market accounts is the fact that it is largely unregulated by
government entities. Since the banks deal with a variety of currencies issued by
foreign entities, it is difficult for domestic governments to intervene, particularly
in the United States. However, with the establishment of the flexible exchange rate
system in 1973, the Federal Reserve System was given powers to stabilize lending
currencies in the event of a crisis situation. But one problem that arises is that these
crises are not defined by the regulations i.e. intervention must be established based
on each case and the Federal Reserve must work directly with central banks around
the world to resolve the matter. This adds to the volatility of
the Eurocurrency Market.

Despite its name, the Eurocurrency Market is primarily influenced by the value of
the American dollar. Nearly two-thirds of all assets around the globe are
represented by U.S. currency. The challenge with foreign banks revolves around
the fact that regulations enforced by the Federal Reserve are only enforceable
within the U.S. The taxation level and exchange rate of the American dollar varies
depending on the nation. For example, an American dollar in Vietnam is worth
more than it is in Canada, further influencing the market.

It's important for those dealing with these kinds of financial terms to understand
that the term eurocurrency is something that emerged from informal use. Thinking
that this term has to do with the currency of the European Union will result in
misunderstandings about foreign deposits in domestic banks. It's also important to
think about the way that some countries protect their national economies by
limiting foreign deposits or foreign holdings.

In some countries, foreign currency has historically been an illegal asset for
citizens. Though globalism has largely changed the way most of the world's
nations view financial freedoms, some countries still have restrictions in place
about changing denominations of funds, or moving them from one nation to
another. Looking at how eurocurrency is used can give one insight into the kinds
of rules and regulations that affect international money transfers.

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 EUROCURRENCY MARKET

History

The Eurocurrency Market has its roots in the World War II era. While the war was
going on, political challenges caused by the takeover of the continent by the Axis
Powers meant that there was a limited marketplace for trading in foreign currency.
With no friendly government operations within the European marketplace, the
traditional economies of the nations were displaced, along with the currencies. To
combat this, especially due to the fact that many American companies were tied
to the well-being of business behind enemy lines, banks across the world began to
deposit large sums of foreign currency, creating a new money market.

After World War II, the amount of US Dollars outside the United States increased
enormously, both as a result of the Marshall Plan and as a result of imports into
the USA. As a result, large sums of US Dollars were in custody of foreign
countries, including the Soviet Union, had deposits in US dollars in USA banks.

After the invasion of Hungary in 1956, the Soviet Union feared that its deposits in
American banks could be frozen as retaliation. A British bank offered the Soviets
the possibility of receiving its US Dollar reserves as deposits, outside the USA.
This operation was considered the first to create so called Eurodollars.

Gradually, as a result of the successive commercial deficits of the United States,

the Eurodollar market expanded until today where it is available in virtually every
country. Today, Eurocurrency refers to deposits in any currency residing in banks
that are located outside the borders of the currencys country. For example, a
deposit denominated in Yen residing in an Australian bank is a Eurocurrency
deposit, or more specifically a EuroYen deposit. Similar external deposits apply
to EuroSterling, EuroEuro, EuroSwissFranc, etc.

While opening up of the domestic markets began only around the end of seventies,
a truly international financial market had already been born in the mid-fifties and
gradually grown in size and scope during sixties and seventies.

This refers to the well-known Eurocurrencies Market. It is the largest offshore

market. Prior to 1980, Eurocurrencies market was the only truly international
financial market of any significance. It is mainly an inter-bank market trading in
time deposits and various debt instruments. What matters is the location of the
bank neither the ownership of the bank nor ownership of the deposit.The prefix
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 EUROCURRENCY MARKET

Euro is now outdated since such deposits and loans are regularly traded outside
Europe.

Over the years, these markets have evolved a variety of instruments other than
time deposits and short-time loans, e.g. certificate of deposit (CDs), euro
commercial paper (ECP), medium-to long-term floating rate loans, Eurobonds,
floating rate notes and euro medium-term notes (EMTNs). The difference between
Euro markets and their domestic counterparts is one of regulation.

Eurobonds are free from rating and a disclosure requirement applicable to many
domestic issues as well as registration with securities exchange authorities.

Emergence of Eurocurrency Markets

1. During the 1950s, the erstwhile USSR was earning dollars from the sale
of gold and other commodities and wanted to use them to buy grain and
other products from the West, mainly from the US. However, they did not
want to keep these dollars on deposit with banks in New York, as they
were apprehensive that the US government might freeze the deposits if the
cold war intensified. They approached banks in Britain and France who
accepted these dollars and invested them partly in US.

2. Domestic banks in US (as in many other countries) were subjected to

reserve requirements, which meant that a part of their deposits were
locked up in relatively low yielding assets.

3. The importance of the dollar as a vehicle currency in international trade

and finance increased, so many European corporations had cash flows in
dollars and hence temporary dollar surpluses. Due to distance and time
zone problems as well as their greater familiarity with European banks,
these companies preferred to keep their surplus dollars in European banks,
a choice made more attractive by the higher rates offered by Euro banks.

The main factors behind the emergence and strong growth of the Eurodollar
markets were the regulations on borrowers and lenders imposed by the US
authorities who motivated both banks and borrowers to evolve Eurodollar
deposits and loans.
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 EUROCURRENCY MARKET

Added to this are the considerations mentioned above, viz. the ability of Euro
banks to offer better rates both to the depositories and the borrowers and
convenience of dealing with a bank that is closer to home, which is familiar
with business culture and practices in Europe.

The origin of the Eurocurrency market is that the market in currency trading
outside their respective domestic economy. Several factors were behind their
birth:

1. The centrally planned economies were reluctant to hold bank deposits in the
United States, so they put their dollar earnings on deposit in London.
Gradually other European dollar holders did the same, a tendency that was
particularly marked when the United States ran large balance of payments
deficits.

2. Balance of payments pressures made the United Kingdom government limit

British banks external use of sterling, so they had a strong incentive to
develop business in foreign currencies.
3. By the end of 1958 the main industrial countries had restored full
convertibility of their currencies. The new freedom produced a surge of
international banking business.

The growth of the Eurocurrency was also stipulated by certain monetary

regulations in the United States. For instance, Regulation Q put a ceiling on the
interest rates that banks operating in the United States could offer to domestic
depositors were naturally attracted to Eurobanks that were not bound by
Regulation Q. In addition, banks in the United States were required to hold non-
interest-bearing reserves. By diverting dollar deposits to their offshore branches
or subsidiaries, U.S. banks were able to avoid trying up so much of their funds in
reserve requirements at a zero rate.

General controls on the movement of capital also helped to boost the Eurocurrency
markets. In 1965, of the Voluntary Foreign Credit Restraint Program (VFCR) in
the United States. The specified goal of the VFCR was to limit the growth of
foreign lending by U.S. banks. Instead, their foreign branches which were not

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subject to the VFCR took deposits and onlent them outside the ceiling. Between
1964 and 1973 the number of U.S. banks with overseas branches increased from
181 to 699 over the same period

At the end of the 1960s and during the early 1970s the Eurocurrency markets,
which had been located in Western Europe (and centered in London), expanded to
a number of other offshore banking centers. These were typically small
territories that had tax, exchange control and banking laws favourable to
international banks. The business was entrepot in nature, with foreign currency
funds deposited by one foreign source and then onlent to another. Offshore centers
have been set up in the Caribbean area, Latin America, the Middle East and
establishment of international banking facilities (IBFs) in the United States
designed to bring the locus of American banking back onshore.

With the recent strong growth of domestic currency lending abroad, total
international lending is now the most meaningful lending aggregate and it
encompasses Eurocurrency market activity.

The foreign exchange market was formed back in 1971 when the gold standard as
removed and countries started using free floating currencies. At first only banks
and large investment actually traded on this exchange and the managers that did it
correctly ended up making millions and even billions of dollars from it.
Unfortunately the common man could not really play without an entrance into the
market from somebody higher up. That was until the internet came along and made
it so that anybody with a little bit of cash can start doing one foreign currency
trading and make really good money.

The laws of supply and demand are always at work. One thing that has been
playing on the news is the situation that Greece is finding itself in where they are
basically having the same problems that our system as having and banks from all
over the EU are trying to keep their economy afloat. This has caused the
weakening of the Euro (currency used in many European countries) while having
a strengthening effect on the dollar because people were afraid of losing in the
Euro. This is just an example that could go any which way.

Features of the Market

The following are the special features of the Eurocurrency market:

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 EUROCURRENCY MARKET

1. Types of transactions:
Transactions in each currency take place outside the country if its issue. For
example, dollars earned by a Japanese firm from exports may be deposited
with a bank in London. The London bank is free to use the funds for lending
to any other bank. The bank may use it for lending to French Bank. Thus
the utility of the currency is entirely outside the control of the central bank
of the country issuing the currency. For this reason, Eurcurrencies are also
referred to as offshore currencies.

2. Huge amount of transaction:

Generally they are only in millions of USD. This has led to syndication of
loans, where large numbers of banks participate in the lending operations.
It also consists of pool of large number of short term deposits, which
provides the biggest single source of funds for commercial banks.

3. Highly competitive market:

Eurocurrency market is a highly competitive market with free access for
new institutions in the market. There are no entry barriers. The lending rates
are low and deposit rate are high, thus allowing a wafer thin margin for
operations. Consequently, the margin between the interest rates on deposits
and advances has narrowed down considerably. Consumers, i.e. investors
and borrowers derive advantage out of this situation.

4. Floating rates of interest based on LIBOR:

The rate of interest is linked to a base rate, usually the London Inter-Bank
Offered Rate (LIBOR). The interest on the deposit or the advance would be
reviewed periodically and changed in accordance with change, if any,
LIBOR.

5. Dominance of Dollar denominated transactions:

US dollar remains the leading currency traded in the Eurocurrency market,
even though its share is declining. However, other currencies are now
emerging thus reducing the role of dollar. Other currencies traded in the
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market on large scale are Deutsche mark, Japanese Yen, Pound Sterling and
Swiss France.

6. Four different segments:

The Eurocurrency market can broadly be divided into four segments:
i. Euro credit markets, where international group of banks engage in
lending for medium and long term
ii. Euro bond market, where banks raise funds on behalf o international
borrowers by issuing bonds
iii. Eurocurrency (deposits) market, where banks accept deposits, mostly
for short term
iv. Euro notes market, where corporate raise funds.

7. Control of the country of issue of the currency:

Even though the currency is utilised outside the country of its origin, it has
to be held only in the country of its issue. For example, the Japanese firm
deposits its dollar earnings with the bank in London. The London bank will
keep the funds in a New York bank in its own name. When the London bank
lends the amount to the French bank, it will give suitable instructions to the
New York bank. On receipt of the instructions, the New York bank will
debit the account of the London bank and credit it to the account of the
French bank. Thus ultimately the settlement of all dollars transactions takes
place in New York. Similarly, settlement of all Eurosterling is made in
London.

Characteristics of Eurocurrency Markets:

The Eurocurrency market has several interesting characteristics:

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1. It is a wholesale rather than retail market, which means that transactions

tend to be very large. Public borrowers such as governments, central banks
and public-sector corporations tend to borrow most of the funds. Also,
nearly four fifths of the Eurodollar arket is interbank, which means that the
transactions take place between banks.

2. The market is essentially unregulated.

3. Deposits are primarily short term. Most of the deposits ae interbank, and
they tend to be very short term. This leads to concern about risk, since most
Eurocurrency loans are for longer period of time

4. The Eurocurrency market exists for savings and time deposits rather than
demand deposits. That is, institutions that create Eurodollar deposits do not
draw down those deposits into a particular national currency in order to buy
goods and services.

5. The Eurocurrency market is primarily a Eurodollar market. In addition to

ordinary deposits in the Eurocurrency market, there are also certificates of
deposits (CDs) available in dollars, sterling and yen. Although most are
traded in multiples of $1 million or more. The CDs are usually quoted at a
discount at a fixed interest rate, but they can also be quoted at floating
interest rates.

Functions of the Eurocurrency Markets

The Eurocurrency market serves several important functions:
Its very nature allows market forces a fuller play than the counterpart
domestic market constrained with regulations and laws. Thus, it gives a
more accurate reading of market forces. Indeed, the more opaque the
domestic market due to distortions, the more critical the role of the
Eurocurrency market as a barometer of market forces. A paradox should be
noted here. Since this market owes its existence to impediments in the
domestic markets, it stands to reason that any reduction (if not removal) in
regulations in the domestic markets in recent years should decrease the

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relevance of the Eurocurrency market. However, its significance has

increased rather than diminished over time. It is likely that taxes and
transaction costs have assumed a much more pivotal role than ever before
because of pressures on bank profits created by intensified competition.
The Eurocurrency markets are well connected and efficient. As a result, the
market can be used for hedging purposes. Banks can buy and sell foreign
currency denominated assets and liabilities of different maturities and
amounts for managing their exposure to interest rate and currency risk.

The Eurocurrency markets are well funded, and thus are convenient sources
for funding a banks domestic and international loans.

Finally, new products are needed by the banks clientele to contain

exposure resulting from globalization, and such products may have legal,
regulatory, or tax implications that make them unsuitable for introduction
in the domestic market.

Countries Responsible for the Growth of the

Eurocurrency Market
1. China (fear that its Fx in USD would be blocked).
2. Korea (War broke out in 1950)
3. Russia (erstwhile USSR){because of their banking presence in Paris and
London}
4. UK (policy of not granting sterling loan outside sterling area in 1957).
5. USA (indeed blocked identifiable Fx in USD in 1950, Federal Reserve
Act, regulation Q and M; control and restrictions on borrowing funds
in US in 1965 and introduction of interest equalization tax in 1963)

China, Korea And Russia:

Since 1949, China feared that its dollar earnings would be blocked by USA. So
China shifted its dollar earnings to Paris in the Russian Banks. Korean war broke
in 1950. So USA indeed blocked Chinese indentifiable dollar deposits in USA.

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Russian banks in Paris and London started disguising their balances by placing
them in western European banks rather than in New York. So the communist
countries had dollar claim on the western European banks and western European
banks had similar claim on USA.
United Kingdom
British Government in 1957, decided not to grant sterling pound loans
outside sterling area.
During the same period, however, Western European banks were permitted
to foreign currency deposits (say bank in London will accept dollar deposit).
So the banks in London offered loans to their non-sterling area customers.

United States Of America (USA)

Federal Reserve Act: Regulation Q

This act was about restriction on payment of interest on dollar deposits as
well as other currency deposits.
No interest was payable on deposits having maturity of 30 days or less.
There were restrictions and ceilings on interest payments on deposits having
maturity above 30 days.
Therefore, the dollar deposits of Non Resident US citizens got shifted to
Europe as the banks in Europe offered higher rates of interest on dollar
deposits
Foreign (for US) investors also shifted their dollar deposits from US to
centres outside US, mostly to banks in London.
London Banks used these deposits for lending to its customers in non-
sterling areas.
Thus London got the prominence in borrowing and lending Euro-dollar.

Federal Reserve Act: Regulation M

This act was about reserve requirement of the banks on their deposits.
The act required US banks to block more money in reserves, than European
banks.
US banking regulation was not very tight then (and it is not so even now)
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American banks found it beneficial to move the deposits of Non Resident

US citizens as well as those of resident citizens to banks in Europe.

Eurocurrency Centers

A Eurocurrency or international banking center is a place where a number of banks

are concentrated to conduct transactions related to deposits and loans denominated
in various Eurocurrencies. Although Eurocurrency markets are global in nature,
the deposit and loan rates in each location are somewhat different, reflecting the
local risk and impediments.

1. Different time zones thrust different locations into the limelight during a typical
day.
2. Differing regulatory (e.g., disclosure or report filing) or tax (e.g., annual
registration fees) requirements may lead to development of new locations.
3. Locations that meet the infrastructure needs (e.g., communications network and
availability of skilled personnel) have always been a major drawing card for well-
established centers, such as London and New York.

There are five major Eurocurrency centers: Western Europe (represented by

London as the headquarters), the Caribbean and Central America, the Middle East,
Asia, and the USA. London is the oldest and foremost Eurocurrency center. Its
prominent position is the result of its history of financial expertise and lack of
government regulations for Eurocurrencies. The Bank of England does not have
reserve requirements on Eurocurrency deposits or capital requirements for the
branches of foreign banks. During the 1980s, Japanese and US banks dominated
the London market. Now banks from other European countries have a respectable
representation.

In the Caribbean and Central American currency center, the Cayman Island is one
of the most attractive locations for setting up shell branches for US banks where
transactions are booked or routed to for a variety of reasons such as lenient
disclosure requirements and low or no profit taxes. It is not difficult for a large
multinational bank to open a branch in the Cayman Islands. The minimum capital

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requirement can be met by using the capital of the parent bank. Furthermore, there
are no reserve requirements for Eurocurrency operations.
Bahrain is the center of the Middle East market in terms of the foreign exchange
and Eurocurrency trading. Its close proximity to Saudi Arabia and Kuwait is
important for currency trading and lending activities in the region.
Tokyo, Singapore, and Hong Kong are three major Asian currency centers. The
Japanese government has been widely known to have a stronghold on its financial
markets. Because of intense pressure from the USA and other governments, the
Japanese government has gradually deregulated its financial markets. In late 1986,
the Japanese government set up the Japan Offshore Market (JOM) in Tokyo for
booking accounts exclusively for non-resident transactions (including transactions
of foreign subsidiaries of Japanese corporations).Transactions in JOM are exempt
from reserve requirements, withholding tax, and interest rate controls that apply
to domestic banking. The major beneficiaries of JOM are Japanese regional banks
that do not have overseas branches. Although Japan was attracting more attention
through the 1980s in the Asian currency market because of liberalization of the
Japanese financial market and the prominent position of the Japanese banks
globally, several recessions in the 1990s coupled with political indecision has at
least temporarily removed the bloom of the JOM. Two major reasons for the
existence of Singapore and Hong Kong are:
(a) the abundance of the US dollar circulating among Far Eastern residents
during the Vietnam War; and
(b) the differences in time zones vis--vis the USA and Europe that create
inconvenience for conducting business transactions dealing in the US
dollar.
Thus, the combination of the Asian dollar market, European centers, and the US
market provides 24-hour service to customers all over the world.
Singapore is now the headquarters for the Asian dollar market. The Singapore
government, in an attempt to compete with Hong Kong for leadership in the Asian
dollar market, eliminated its 40 percent withholding tax on interest income earned
by non-residents in 1968, and reduced its tax on bank profits on offshore loans in
1973. In addition, other taxes have also been reduced or eliminated while the
exchange control measures for promoting growth in the Asian dollar market have
been liberalized.
Since December 1981, the Federal Reserve System has permitted US banks and
branches of foreign banks in the USA to establish IBFs, which are exempt from

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reserve requirements, federal taxes, and deposit insurance. The intent of setting up
IBFs was to attract offshore banking business to the USA. Many shell bank
branches in places like the Cayman Islands or the Bahamas really amounted to
nothing more than a small office and a telephone for booking loans and deposits.
The location of IBFs reflects the location of banking activity in general. Thus it
is not surprising that over 75 percent of the IBF deposits are in New York State.
IBFs do not require physically separate banking entities, as they are just the
booking facilities located in the USA and sharing basic characteristics of
Eurobanks outside the country. IBFs can do business with only non-bank foreign
residents; thus IBF s cannot lend to or accept deposits from US residents.
Although borrowing from a US bank is allowed, it is subject to reserve
requirements. At the same time, IBFs are not allowed to issue negotiable
instruments such as CDs. Because of these restrictions, IBFs are not a perfect
substitute for offshore deposit facilities. Still, to make them more competitive with
offshore banking, the minimum deposit maturity is overnight for interbank IBFs
and two business days for nonbank foreign residents. The minimum size of
deposits is in excess of $100,000; hence they are not subject to deposit insurance.

SEGMENTS OF EUROCURRENCY MARKETS

Euro-Credit Markets

Tenure: Medium and Long Term Loans [upto 10-15 years 10% of loans, 5-8
years 85% of loans, 1-5 years 5% of loans] provided by group of banks.
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1. Amount: It is a wholesale sector of the international capital market.

2. Security: Loans are provided without any primary or collateral security.
Credit rating is the essence of lending
3. Type of loan: a) revolving [like cash credit]
b) Term Credit

4. Interest Rate: Generally 1% above the reference rate rolled over every 6
months

5. Currency: Generally USD, but can be any other currency as required bt

the borrower and ability of the lender.

Syndcation of Loan:
Managing banks, as desired by the borrower
Lead bank, generally who takes the largest share of lending
Agent bank, as required to take interest of the banks in syndication and
comply with the procedure
Common assessment of the borrower and his country
Common documentation
In very few cases co-financing with IMF and IBRD is possible.

Euro-Bonds

Euro-Bonds are unsecured securities

They are therefore issued by borrowers of high financial standing
When they are issued by government corporation or local bodies, they are
guaranteed by the government of the country concerned
Euro-Bond is outside the regulation of a single country. The investors are
spread worldwide.
However, foreign bonds are issued in only one country and are subject to
the regulation of the country of issue.
Selling of EB is through syndicates of the banks
Lead manager advices about size, terms and timing of the issue.
Entire issue is underwritten.

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Lead managgers fees, underwriting commission is somewhere between 2%

and 2.5% of the value of the issue
Lead manager allocates the bonds to all members of the selling group at
face value less their commission.
Thereafter every member is on is own.
They can sell to investors at whatever price they can obtain
Thus no two investors in the Euro-Bond market need to pay the same price
for the newly issued bonds.

Features of Euro-Bonds:
Most Euro-Bonds are Bearer securities
Most bonds are denominated in USD 10,000
Average maturity of the Euro-Bond is 5-6 years
In some cases maturity extends to 15 years

Types of Euro-Bonds:
Straight or fixed rate bonds
1. These are fixed interest bearing securities
2. Interest is normally payable yearly
3. Year is considered of 360 days
4. Maturities range from 3-25 years
5. Right of redemption before maturity may be there or may not be
there
6. If the right of redemption is there then redemption is done by
offering a premium

Convertible bonds
1. These are fixed interest bearing securities
2. Investor has an option to convert bonds into equity shares of
borrowing company
3. The conversion is done at the stipulated price and during the
stipulated period.
4. Conversion price is normally kept higher than the market price.
5. The rate of interest is lower than the rate of interest on comparable
straight bond.

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6. Sometimes the bonds are issued in a currency other than the

currency of the share. This provides an opportunity to diversify the
currency risk asthese bonds are issued with fixed exchange rate of
conversion.
7. Bonds with warrants: warrant is part of the bond but is detachable
and traded separately, when the conversion takes place. The
investor can keep the bond and trade the warrant for shares.

Currency option bonds

1. They are similar to straight bonds
2. Generally issued in one currency and option to take interest and
principal in another currency
3. Exchange rate is either fixed (generally not) or is spot rate
prevailing in the market three business days before the due date of
payment of interest and principal.

Floating rate notes:

1. FRN is similar to straight bonds with respect to maturity and
denomination
2. Rate of interest however varies and is based on LIBOR+1/8%,
1/4%, 1.5%...
3. Rate of interest is adjusted every 6months
4. Minimum interest rate clause may be included
5. Drop lock clause may also be included, which means if minimum
interest rate happens to be paid then it is locked for the remaining
period of the bond
6. Generally it is found that banks issue and invest in FRNs

Euro-currency Deposits

1. Euro-bonds represent the funds amassed by the bank on behalf of

international borrower. Euro-currency deposits represent the funds
accepted by the bank themselves.
2. The Euro-currency market consists of all deposits of currencies placed with
the banks outside their home currency.

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 EUROCURRENCY MARKET

3. The deposits are accepted in Euro-currencies aa well as currency cocktails

(SDR, ECU etc.)
4. The deposits are placed at call (overnight, two days or seven days notice)
for USD, Sterling Pound, Canadian dollars and Japanese Yen and of two
days in any other currencies
5. Time deposits are accepted for periods of 1,3,6 and 12 months for ll
currencies
6. USD and Sterling pound can be placed for a period of 5 years
7. Minimum size of deposit is USD 50,000 or its equivalent

Euro-Currency Deposits Certificate of Deposit

1. It is a negotiable instrument
2. They are bearer instrument and can be traded in the secondary market
3. Period: 1 year(1month through 12 months)
4. Minimum amount: USD 50,000
5. Currencies: USD, Sterling Pound, Yen
6. Interest rate: 1/8% below LIBOR
7. Tranche CD: carries different rates of interest for cash tranche
8. Discount CD: they are issued at discount.

3.4 Segment 4: Euro- Notes Market

1. This market constitutes the instruments of borrowing issued by the

corporate in the Euro-currency market
2. The instrument issue may be underwritten or may not be underwritten
3. The borrowers directly approach the lenders without the intermediation of
the banks or financial institution
4. Instruments are of the following categories:
i. Commercial paper
ii. Note issuance facilities
iii. Medium term notes
Commercial paper
1. It is a promissory note with maturity less than a year, generally the
period varies between 90days to 180 days
2. Generally issue is not underwritten
3. Amount: USD 100,000 or equivalent

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4. Issued on Discount to Yield basis, but interest rate works out lesser
than that is paid on bank borrowing nd higher than that is paid by the
bank on deposits
5. They are unsecured instrument

Note Issuance Facilities (NIF)

1. Borrowers place short term notes of 3-6 months maturity directly with the
investors and the notes are rolled over on maturity
2. The banks underwrite at the time of issue as well as when the note are rolled
over
3. With slight variation they are lso known as:
i. Revolving underwriting facility(RUF)
ii. Standby Note Issuance Facility(SNIF)
iii. Note Purchase Facility (NPF)

Medium Term Notes

1. MTN represents Long Term, Non Underwritten and fixed interest rate
source of raising finance
2. It can be comparable with Euro-bonds with a difference that Eurobonds
issue is underwritten, where as MYN issue is ot underwritten
3. Their maturity is somewhere between short term CPs(less than one year)
and long term Euro bonds(more than 5 years)
4. They are privately placed and have great flexibility

CURRENT SCENARIO OF EUROCURRENCY MARKET

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 EUROCURRENCY MARKET

In every economic crisis there comes a moment of clarity. In Europe soon,

millions of people will wake up to realize that the euro as we know it is gone.
Economic chaos is awaited.
Europes crisis to date is a series odd supposedly decisive turning points that
each turned out to be just another step down a steep hill. It is already nearly
impossible to save Greek membership in the euro area: depositors flee banks, tax
payments, and companies postpone paying their suppliers either because they
cant pay or because they expect soon to be able to pay in cheap drachma.
The troika of the European Commission (EC), European Central Bank (ECB), and
International Monetary Fund (IMF) has proved unable to restore the prospect of
recovery in Greece and any new lending program would run into the same
difficulties. Particularly as the Greek failure mostly demonstrates how wrong a
single currency is for Europe. The Greek backlash reflects the enormous pain and
difficulty that comes with trying to arrange internal devaluations (a euphemism
for big wage and spending cuts) in order to restore competitiveness and repay an
excessive debt level.
Faced with five years of recession, more than 20 percent unemployment, further
cuts to come and a stream of failed promises from politicians inside and outside
the country, a political backlash seems only natural. With IMF leaders, EC
officials and financial journalists floating the idea of a Greek exit from the euro,
Greeces economy can only get worse. Greeces exit is simply another step in a
chain of events that leads towards a chaotic dissolution of the euro zone.
During the next stage of the crisis, Europes electorate will be rudely awakened to
the large financial risks which have been foisted upon them in failed attemptst
keep the single currency alive. If Greece quits the euro later this year, its
government will default on approximately 300 billion euros of external public
debt, including roughly 187 billion euros owed to the IMF and European Financial
Stability Facility (EFSF).

More importantly and currently less obvious to German taxpayers, Greece will
likely default on 155 billion euros directly owed to the euro system (comprised of
the ECB and the 17 national central banks in the euro zone). This includes 110

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 EUROCURRENCY MARKET

billion euros provided automatically to Greece through the Target2 payment

system which handles settlements between central banks for countries using the
euro. As depositors and lenders flee Greek banks, someone needs to finance that
capital flight, otherwise Greek banks would fail. This role is taken on by other
euro area central banks, which have quietly leant large funds, with the balances
reported in the Target2 account. The vast bulk of this lending is, in practice, done
by the Bundesbank since capital flight mostly goes to Germany, although all
members of the euro system share the losses if there are defaults.
The ECB has always vehemently denied that it has taken an excessive amount of
risk despite its increasingly relaxed lending policies. But between Target2 and
direct bond purchases alone, the euro system claims on troubled periphery
countries are now approximately 1.1 trillion euros. This amounts to over 200
percent of the capital of the euro system. No responsible bank would claim these
sums are minor risks to its capital or to taxpayers. These claims also amount to 43
percent of German Gross Domestic Product, which is now around 2.57 trillion
euros. With Greece proving that all this financing is deeply risky, the euro system
will appear far more fragile and dangerous to taxpayers and investors.
The calamity of a Greek default is likely to result in a flight from banks and
sovereign debt across the periphery, and that to avoid a greater calamity all
remaining member nations need to be provided with unlimited funding for at least
18 months. The ECB is not prepared to provide such a firewall, and no other entity
has the capacity, legitimacy, or will to do so.
The most likely scenario is that the ECB will reluctantly and haltingly provide
funds to other nations an on-again, off-again pattern of support and that
simply wont be enough to stabilize the situation. Having seen the destruction of
a Greek exit, and knowing that both the ECB and German taxpayers will not
tolerate unlimited additional losses, investors and depositors will respond by
fleeing banks in other peripheral countries and holding off on investment and
spending.

Covered Interest Arbitrage

Covered interest arbitrage is an arbitrage trading strategy whereby an investor
capitalizes on the interest rate differential between two countries by using a
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 EUROCURRENCY MARKET

forward contract to cover (eliminate exposure to) exchange rate risk. Using
forward contracts enables arbitrageurs such as individual investors or banks to
make use of the forward premium (or discount) to earn a riskless profit from
discrepancies between two countries' interest rates. The opportunity to earn
riskless profits arises from the reality that the interest rate parity condition does
not constantly hold. When spot and forward exchange rate markets are not in a
state of equilibrium, investors will no longer be indifferent among the available
interest rates in two countries and will invest in whichever currency offers a higher
rate of return. Economists have discovered various factors which affect the
occurrence of deviations from covered interest rate parity and the fleeting nature
of covered interest arbitrage opportunities, such as differing characteristics of
assets, varying frequencies of time series data, and the transaction costs associated
with arbitrage trading strategies.

Effect of Arbitrage
If there were no impediments, such as transaction costs, to covered interest
arbitrage, then any opportunity, however minuscule, to profit from it would
immediately be exploited by many financial market participants, and the resulting
pressure on domestic and forward interest rates and the forward exchange rate
premium would cause one or more of these to change virtually instantaneously to
eliminate the opportunity. In fact, the anticipation of such arbitrage leading to such
market changes would cause these three variables to align to prevent any arbitrage
opportunities from even arising in the first place: incipient arbitrage can have the
same effect, but sooner, as actual arbitrage. Thus any evidence of empirical
deviations from covered interest parity would have to be explained on the grounds
of some friction in the financial markets.

Introduction of Libor
At the beginning of the 1980s, demand grew for an accurate measure of the real
rate at which banks would lend money to each other. An increasing number of
banks, especially in the London markets were actively trading new instruments
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 EUROCURRENCY MARKET

such as Forward Rate Agreements. At the same time London was emerging as a
center for loan syndication. While many banks considered these new instruments
and arrangements as attractive, they were also inhibited by the nature of the
underlying rates that had to be agreed before a bank could enter into a
contract.This became increasingly important as London's status grew as an
international financial centerAs a result, in 1984 UK banks asked the British
Bankers Association (BBA) to develop a calculation that could be used as an
impartial basis for calculating interest on syndicated loans.
Today, BBA libor is the primary benchmark for short term interest rates globally.
It is used as a barometer to measure strain in money markets and often as a gauge
of the markets expectation of future central bank interest rates. Independent
research indicates that around $350 trillion of swaps and $10 trillion of loans are
indexed to BBA libor. It is also used for an increasing range of retail products,
such as mortgages and college loans.
The British Bankers Association
The British Bankers Association (BBA) was asked by the banks it represented to
bring in a measure of uniformity into the market and to produce a benchmark to
act as a reference for these new instruments. The idea was that rather than
negotiating the underlying rate or forming rates by taking averages of ad-hoc
panels, banks could now usea standard rate. This facilitated the markets and made
benchmarking more transparent and objective.This led to the first British Bankers
Association libor rates which were published in January 1986, initially in 3
currencies: US Dollars, Japanese Yen and Sterling.
The design of BBA libor has seen one significant change since its inception. In
1998 it was agreed to change the question from At what rate do you think interbank
term deposits will be offered by one prime bank to another prime bank for a
reasonable market size today at 11am? The new question, that is still used today
is At what rate could you borrow funds, were you to do so by asking for and then
accepting inter-bank offers in a reasonable market size just prior to 11 am?. This
was decided after considerable consultation with the markets as they no longer felt
that a universal definition of a prime bank could be given. It also has the advantage
of linking the figures submitted by banks to their own activity, rather than a
hypothetical entity.
DEFINITION of 'LIBOR Scandal'

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 EUROCURRENCY MARKET

A scandal peaking in 2008, in which financial institutions were accused of fixing

the London Interbank Offered Rate (LIBOR). The LIBOR scandal involved
bankers from various financial institutions providing information on the interest
rates they would use to calculate LIBOR. Evidence suggests that this collusion
had been active since at least 2005.
BREAKING DOWN 'LIBOR Scandal'
LIBOR is an important interest rate when it comes to global finance. It is used to
determine the price that businesses pay for loans and individuals pay for
mortgages, and is also used in derivative pricing. The rate is supposed to represent
the interest rate that a bank pays to borrow from another bank. The scandal
involved banks understating the interest rate, which in aggregate, could keep the
LIBOR rate artificially low.
LIBOR is also used as an indicator of a banks health, and the manipulation of the
rate leading up to the 2007-2008 financial crisis made some financial institutions
appear stronger than they actually were.
The brashness of bankers involved in the scandal became evident as emails and
phone records were released during investigations. Evidence showed traders
openly asking others to set rates at a specific amount so that a position would be
profitable. Regulators in both the United States and United Kingdom levied
millions of dollars in fines on banks involved in the scandal. Because LIBOR is
used in the pricing of many financial instruments, corporations and governments
have also filed lawsuits alleging that the rate fixing negatively affected them.

Libor Scandal
The Libor scandal was a series of fraudulent actions connected to the Libor
(London Interbank Offered Rate) and also the resulting investigation and reaction.

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 EUROCURRENCY MARKET

The Libor is an average interest rate calculated through submissions of interest

rates by major banks across the world. The scandal arose when it was discovered
that banks were falsely inflating or deflating their rates so as to profit from trades,
or to give the impression that they were more creditworthy than they were.Libor
underpins approximately $350 trillion in derivatives. It is currently administered
by Intercontinental Exchange, which took over running the Libor in January 2014.
The banks are supposed to submit the actual interest rates they are paying, or
would expect to pay, for borrowing from other banks. The Libor is supposed to be
the total assessment of the health of the financial system because if the banks being
polled feel confident about the state of things, they report a low number and if the
member banks feel a low degree of confidence in the financial system, they report
a higher interest rate number. In June 2012, multiple criminal settlements by
Barclays Bank revealed significant fraud and collusion by member banks
connected to the rate submissions, leading to the scandal.
Because Libor is used in US derivatives markets, an attempt to manipulate Libor
is an attempt to manipulate US derivatives markets, and thus a violation of
American law. Since mortgages, student loans, financial derivatives, and other
financial products often rely on Libor as a reference rate, the manipulation of
submissions used to calculate those rates can have significant negative effects on
consumers and financial markets worldwide.
On 27 July 2012, the Financial Times published an article by a former trader which
stated that Libor manipulation had been common since at least 1991. Further
reports on this have since come from the BBC and Reuters. On 28 November
2012, the Finance Committee of the Bundestag held a hearing to learn more about
the issue.
The British Bankers' Association (BBA) said on 25 September 2012 that it would
transfer oversight of Libor to UK regulators, as predicted by bank analysts,
proposed by Financial Services Authority managing director Martin Wheatley's
independent review recommendations. Wheatley's review recommended that
banks submitting rates to Libor must base them on actual inter-bank deposit
market transactions and keep records of those transactions, that individual banks'
LIBOR submissions be published after three months, and recommended criminal
sanctions specifically for manipulation of benchmark interest rates. Financial
institution customers may experience higher and more volatile borrowing and
hedging costs after implementation of the recommended reforms. The UK
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 EUROCURRENCY MARKET

government agreed to accept all of the Wheatley Review's recommendations and

press for legislation implementing them.
Significant reforms, in line with the Wheatley Review, came into effect in 2013
and a new administrator will take over in early 2014. The UK controls Libor
through laws made in the UK Parliament. In particular, the Financial Services Act
2012 brings Libor under UK regulatory oversight and creates a criminal offence
for knowingly or deliberately making false or misleading statements relating to
benchmark-setting.
As of August 2015, UBS trader Tom Hayes was the only person convicted in
connection with the Libor scandal. In the UK, six bankers accused over Libor were
cleared in early 2016
Fines for Manipulation
On 27 June 2012, Barclays Bank was fined $200 million by the Commodity
Futures Trading Commission, $160 million by the United States Department of
Justice and 59.5 million by the Financial Services Authority for attempted
manipulation of the Libor and Euribor rates. The United States Department of
Justice and Barclays officially agreed that "the manipulation of the submissions
affected the fixed rates on some occasions".
On 19 December 2012, UBS agreed to pay regulators $1.5 billion ($1.2 billion to
the US Department of Justice and the Commodity Futures Trading Commission,
160m to the UK Financial Services Authority and 59m CHF to the Swiss
Financial Market Supervisory Authority) for its role in the scandal. The
investigations revealed that UBS traders had colluded with other panel banks and
had made over 2,000 written requests for movements in rates from at least January
2005 to at least June 2010 to benefit their trading positions. According to
transcripts released by the UK's Financial Services Authority, UBS traders also
offered financial inducements to interdealer brokers to help manipulate rates by
spreading false information.

Future of Libor
implying that Libor, in all currencies and tenors, will be phased out by the end of 2021.The
main concern of the FCA is that the unsecured lending market on which Libor is based is no

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longer sufficiently active. The FCA therefore believes that it needs to encourage market
participants to undertake the work required to move to alternative interest rate benchmarks.

Libor rates play a crucial role in determining the value of various assets, and changing these
benchmarks has the potential for significant economic impact if markets become disrupted.

In the short term the market reaction to the speech was muted. The basis between Libor and
the Sterling Overnight Index Average (Sonia) rates was observed to widen by approximately
2bp at the 30-year maturity very shortly after the speech.

There is much ongoing work in relation to the future of lending rates reviews of (and
changes to) overnight rates, as well as term rates, are occurring in most major markets (see
later in this piece for more details). This work includes consideration of potential Libor
replacements in certain markets. Within the UK there is currently a consultation under way on
the use of reformed Sonia as the Sterling Risk-Free Reference Rate, so additional
consideration needs to be given to how that index might evolve.2 It has been reported that the
administrator of Libor, the US Intercontinental Exchange (ICE), which has undertaken a series
of consultations to reform the Libor data, is committed to continuing to produce it beyond the
five-year period.

Libor is also commonly used as a benchmark rate for many short-term investment funds and
products. Following a series of scandals, the FCA started to regulate Libor and (effective 1
February 2014) the administration of Libor was changed to ICE Benchmark Administration to
provide a stronger governance framework. Despite this, a fall in the number of transactions in
the interbank market has led to concern amongst various global regulators and central banks
that the rate could become unreliable, potentially causing disruption to financial markets.
These concerns have led to working groups being established in all of the major countries
using Libor rates and also the speech by Andrew Bailey in which he appeared to be pushing
for Libor to be phased out by the end of 2021. It is far from certain that Libor will disappear
after this period, or how alternative markets will develop. One particular challenge of a switch
away from using Libor based derivatives at this time is the lack of liquidity for derivatives on
other interest rates in longer maturity tenors. Liquidity in derivatives markets for Sonia, for
example, is then largely focused in maturities out to 30 years, whereas Libor swaps remain the
more liquid instrument and trade out to 50-year maturities.
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 EUROCURRENCY MARKET

This discussion is not only related to the UK market and below we summarise the responses
of other major countries:

US: In December 2014, the Federal Reserve established a group of representatives from major
banks and regulators which it called the ARRC. The ARRC has recommended that US dollar
Libor be replaced by a new benchmark rate calculated from transactions in the US Treasury
sale and repurchase agreement (repo) market. As such the new benchmark will be based on
secured borrowing and lending rates. This rate will be published by the Federal Reserve Bank
of New York and an announcement is expected later in 2017 to outline a timeframe over
which financial markets will be expected to move to this new methodology.

UK: In the UK, the BoE set up the Working Group on Sterling Risk-Free Reference Rates in
March 2015. In April 2017 the group selected a reformed version of Sonia, which was
originally established in 1997 and taken over by the BoE in 2016. Sonia is calculated based on
all overnight sterling transactions of 25m or more conducted in London by listed money
market institutions. The FCA has, after a consultation, announced that it has the agreement of
20 banks that they will submit rates to enable Libor calculations for at least the next five
years. During this period the FCA aims to work with market participants to transition away
from Libor and towards alternative rates in an orderly way. The FCA has stated that it does
not believe markets can rely on Libor continuing to be available indefinitely and that market
participants must take responsibility for their own transition plans.

Eurozone: The European Money Markets Institute chose to continue with current Euribor
methodology after a six-month review to establish whether it could switch to a transaction-
based calculation. The Institute is reportedly continuing to look at ways to evolve the rate and
is believed to be considering a hybrid method, combining transaction data with estimates. The
European Central Bank is also reported as considering providing an unsecured lending rate
based on overnight transactions.

Switzerland: The Swiss National Bank (SNB) set up a working group in 2013 and although
initially market participants expressed a reluctance to switch away from Libor, the group
moved to select two potential replacement candidates. The Swiss Average Rate Overnight
(Saron) rate has evolved as the leading candidate with the alternative Tois rate to be
discontinued by the end of 2017. The Swiss are now in the process of developing the swap
market based on the Saron rate. Following the speech by Andrew Bailey, the SNB has
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released a statement saying that the SNB will announce in a timely away an alternative to
[Swiss] franc Libor for its monetary policy concept

CONCLUSION
The creation and growth of the Eurocurrency market has been an important side
effect of the increase of international economic activity over the past few
decades. The market has expanded largely as a means of avoiding the regulatory
costs involved in dollar-denominated financial. Due to the size and importance of
the foreign exchange market, it remains largely unregulated. There is no
international organization to look over it or any institutions that sets rules. The
name Eurocurrency market is given to any bank deposits in any country held in a
different countrys currency. An example of this is United States dollar depositing
in a British bank. These banks are called Euro banks. The emergence of eurobanks
has facilitated trade and investment between countries. A Eurocurrency is any
currency that is deposited outside of the home country. Since approximately two
thirds of Eurocurrency is U.S. dollars, central banks and regulators are concerned
about Eurocurrency because they are stateless money. Eurocurrency market has
very little regulation, such as taxes, restrictions on capital movements and
exchange controls. Thus, the market attracts more investors. It is easier for banks
around the world to use the Eurocurrency market to move and store funds more
profitably than they could in many countries. Since the market is relatively free of
regulation, Eurodollar market must operate on narrower margins than banks in the
United States. The Eurocurrency market gives investors the opportunity to hold
short-term claims on commercial banks, which also act as intermediaries to
transform these deposits into long-term claims on final borrowers. Not only does
Eurocurrency market allow for more convenient borrowing, it also improves the
international flow of capital for trade between countries and companies. This
market also attracts domestic deposits because it offers a higher interest rate. The
largest Eurocurrency markets are located in London, New York, and Tokyo.
This report discussed various issues related to the Eurocurrency market.
Specifically, it explained development as well as the features of the Eurocurrency
market. The growth of the Eurocurrency results from government-induced
impediments and it requires sustenance from benign indifference on the part of
the government issuing the currency. Institutional setting of various geographic
centres was described to highlight the requisite ingredients for development of
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such centres. The traits of interest rates were discussed with respect to time (term
structure), space (other currencies), and impediments (domestic versus offshore).
Interrelationships among the three were brought out through arbitrage activities
facilitated by new tools based on conventional concepts of term structure and
interest parity theories. Finally, the role of the Eurocurrency market in the
development of new products was discussed with illustrations of NIFs, Euro-CP,
asset securitization, and Eurobonds. It was suggested that it is not the far-reaching
novelty of these products that is important, but what they symbolize: a change in
the bank attitude that marks a break with the past.
The main problem for the Euro crash was not sub-optimal currency areas nor
profligate government spending but fatal flaws in monetary design and an
appalling series of policy mistakes by the European Central Bank (ECB). The
inflation-targeting regime established by the ECB right at the start, coupled with
the reckless dismantling of the old Bundesbank's monetary framework,
contributed decisively to the ensuing gross failures. Further factors in the fatal
cocktail included long-term French monetary nationalism, empowered by a
French President at the head of the ECB, and the succumbing of euro officials to
the same deflation phobia which had gripped the Federal Reserve. There is only
one way which has any real prospect of salvaging European monetary integration
- that is to start again.

BIBLIOGRAPHY
BOOKS:

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1. International Bank Management by Dileep Mehta and Hung Gay

Fung.

2. The Eurocurrency Interbank Market: Potential for International

Crises? Federal Reserve Bank of Philadelphia, Business Review.

3. A Note to Euroyen and Domestic Yen Interest Rates Journal of

Banking and Finance.
.
WEBSITES:
1. www.investopedia.com
2. www.scribd.com
3. www.managementparadise.com
4. www.baseinscenario.com
5. www.wisegeek.com
6. www.tradecurrencies.com

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