Eurodollars

Part of speech: noun

Definitions

1. A type of currency deposited in banks outside the Eurozone; often used in international trade transactions to avoid domestic financial regulations; a financial instrument that facilitates global commerce and investment in a dollar-based market
2. Referring to U.S. dollars held in foreign banks, particularly in Europe; utilized widely for international business dealings to circumvent national financial restrictions; an important concept in foreign exchange markets and international finance
3. Denoting dollar deposits in European banks, allowing for easy access to capital; these funds are commonly used in cross-border transactions to bypass local monetary controls; a key element in global finance and liquidity management

Etymology: "Eurodollars" is the plural of "eurodollar," and the singular is itself a compound of "euro-" and "dollar." The "dollar" part is the familiar American currency, while "euro-" here does not refer to the European single currency that came later. Instead, the prefix signals that the dollars in question are held outside the United States, mainly in European banks, which is why the term describes a place where the money sits rather than a different kind of money. The word therefore names dollar deposits that circulate beyond the reach of American banking regulation. Because the same dollar can be lent and borrowed in London or elsewhere in Europe, these holdings became a significant part of international finance. The compound is a plain, transparent formation, and its meaning follows directly from its two halves: a dollar, located in Europe.