eurodollar
SpecialistFormal / Financial / Technical
Definition
Meaning
A US dollar deposit held in a bank outside the United States, primarily in European banks.
A vast financial market for US dollar-denominated deposits, loans, and securities traded outside US jurisdiction and thus not subject to US banking regulations.
Linguistics
Semantic Notes
Refers to the currency, not a physical note. Despite the name 'euro', it is not related to the European Union's euro currency; the prefix refers to Europe as the original location of the market. Can refer to individual deposits or the market as a whole.
Dialectal Variation
British vs American Usage
Differences
No significant difference in definition. The term is standard in international finance in both regions.
Connotations
Neutral financial/economic term. Connotes offshore banking, international capital flows, and financial markets free from domestic regulation.
Frequency
Equally low-frequency in general language but standard term within finance/economics contexts in both the UK and US.
Vocabulary
Collocations
Grammar
Valency Patterns
The company placed its [funds] in eurodollars.Banks lend [large sums] in the eurodollar market.Interest rates on [eurodollar deposits] are set in London.Vocabulary
Synonyms
Neutral
Weak
Vocabulary
Antonyms
Usage
Context Usage
Business
Common in corporate treasury and international banking discussions.
Academic
Frequent in economics and finance textbooks and journals.
Everyday
Virtually never used.
Technical
Core term in international finance, banking, and financial market analysis.
Examples
By Part of Speech
verb
British English
- The treasury decided to eurodollar a portion of its reserves.
- They are eurodollaring their excess liquidity.
American English
- The firm chose to eurodollar its cash holdings.
- They eurodollared the proceeds from the sale.
adjective
British English
- The eurodollar market in London is highly liquid.
- They quoted a eurodollar deposit rate.
American English
- The eurodollar futures contract traded actively.
- We analysed eurodollar interest rate trends.
Examples
By CEFR Level
- Large banks trade eurodollars in London.
- The interest rate for eurodollars is often different from the US rate.
- The company's treasurer placed $50 million in eurodollar deposits to secure a slightly better yield outside the Federal Reserve's regulatory purview.
- The growth of the eurodollar market in the 1960s fundamentally altered the landscape of international finance by creating a massive pool of stateless capital.
Learning
Memory Aids
Mnemonic
Think 'EUROpean-held DOLLAR'.
Conceptual Metaphor
CURRENCY IS A FLUID (flows internationally, pools in offshore markets).
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Do not confuse with 'евро' (the EU currency). The Russian term is "евродоллар" - a direct cognate.
Common Mistakes
- Using 'eurodollar' to refer to the euro currency.
- Thinking it is a new type of dollar bill.
- Capitalising it as a proper noun (it is typically lowercase).
Practice
Quiz
What is a 'eurodollar'?
FAQ
Frequently Asked Questions
No, it is not a physical banknote. It is a deposit or balance denominated in US dollars held at a bank located outside the United States.
The key difference is jurisdiction. A regular dollar is subject to US banking regulations (like reserve requirements). A eurodollar, being held offshore, is not directly regulated by the US Federal Reserve.
The term originated in the mid-20th century when US dollars began to be deposited in large quantities in European (especially London) banks. The 'euro-' prefix refers to the location, not the currency.
No. While the market originated in Europe, eurodollars can now be held in any bank located outside the United States, including in financial centres like Singapore, Hong Kong, or the Bahamas.