Abstract
Euro-currencies, which had their origins during the 1950s, began to assume grandiose proportions by the mid-1970s. By the latter years of the 1960s numbers in the order of 300–500 billions of US dollars were the estimates of totals by various prestigious agencies, including the Morgan Guaranty Trust and the Bank for International Settlements. By that time the exchange rates of the world’s major currencies had been brought down, to force an end to the Bretton Woods system of fixed exchange rates.
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Notes and References
Harold Lever, ‘Casino of World’s Currencies’, The Times, 15 July 1981.
E. B. Chalmers, The International Interest Rate War (Macmillan, London, 1972).
Boyden E. Lee, ‘The Eurodollar Multiplier’, Journal of Finance vol. 28 no. 4 (Sept. 1973) pp. 65–74.
Mayer, in an early study of the effects of Euro-lending on exchange rates, missed this important point of the difference between liquidity structures to consider only the geographic aspect of Euro-currency lending and its impact on foreign exchanges. In terms of forward exchanges vs. spot markets, the differences in liquidity would be the more significant influence than just whether or not the lending is outside the country. Admittedly this is a very early document, written when Euro-currencies were still in their relative infancy. H. W. Mayer, Interaction Between the Euro-currency Markets and the Exchange Markets, BIS Economic papers, no. 15, May 1958.
Such ‘opportunities’ arise almost continuously. Producers and sellers alike have a demand for money which cannot always be satisfied by increased output. Higher retail prices can satisfy this demand and higher producers’ costs can do so as well, the classic case being the obvious OPEC oil price increase. Competition is the only check on such price increases, and, when this weakens sufficiently, the result is inflation and the rightward shift in the Money Market function. For a detailed development of this concept, see W. Blackman, The Canadian Financial System (McGraw-Hill, 1980) pp.47–57.
J. Hewson and E. Sakakibara, The Euro-currency Markets and Their Implications (Lexington Books, Lexington, Mass., 1975) p. 146.
Pierre Paul Schweitzer, ‘Where Do We Go From Here?’, Banker, Nov. 1982.
Anthony Harris reporting in The Financial Times 23 Sept. 1982.
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© 1989 W. Blackman
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Blackman, W. (1989). Euro-Currencies and International Banking. In: Swiss Banking in an International Context. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-10656-1_7
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DOI: https://doi.org/10.1007/978-1-349-10656-1_7
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