Eurocurrency Markets are used by any banks which hold bank deposits of another countries currency, such as Japanese banks holding U.S.

The history of the Eurocurrency Market dates back specifically to the World War II period. Due to political tension and economic boundaries, many people around the globe were looking for ways to avoid regulatory costs and restrictions set by the government. Specifically, these restrictions involved: special charges and taxes on domestic banking; requirements to lend money to certain borrowers at concessionary rates; interest rate ceilings; rules that prevented competition among banks; and reserve requirements.

The Eurodollar Market has drastically changed the world financial markets of today. The competitive effect of the international money market was the cause of almost all industrialized countries liberalization of domestic money and banking markets.

Euromarkets are formed by European members’ countries using the same currency, the Euro. Euromarkets were established to support international trade within its continent and globally. Tariffs among its members have been abolished to help cross-borders trades easier and cheaper. Non-members’ countries have to pay fixed tariffs, which are imposed by all the Euromarkets members. There is one central bank of all its members’ countries call European Central Bank (ECB).

A Eurocurrency is a dollar or other freely convertible currency deposited in a bank outside its country of origin. Dollars which are deposit in London become Eurodollars. Eurocurrency market consists of banks called Euro banks that accept deposits and make loan in foreign currencies. There is difference between Eurobond and Eurocurrency market, Eurobonds are which sold outside the countries in whose currencies they are denominated, are issued directly by the final borrowers.