MGCR 382 Lecture Notes - Lecture 7: Special Drawing Rights, Eurocurrency, Global Financial System
1 Feb 2017
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Document Summary
The global capital market is a collection of institutions and securities which are all linked via a global network-- the interbank market. This interbank market in which securities of all kinds are traded is the critical pipeline system for the movement of capital. The exchange of securities- the movement of capital in the global financial system- must all take place through a vehicle-- currency. The exchange of currencies is itself the largest of the financial markets. The interbank market which must pass through the exchange of securities using currencies, bases all of its pricing through the single most widely quoted interest rate in the world-- libor (london interbank offered rates) Domestic currencies of one country on deposit in a second country. Any convertible currency can exist in euro form. Money market device for excess corporate liquidity. The modern eurocurrency market was born shortly after ww2. Eastern european feat of us banks led to deposits in western europe.
