Which one of the following gives rise to a new eurocurrency deposit?
A) a U.S. exporter receives payment from a U.K. importer in U.S. dollars drawn on a New York bank and places dollars in a London bank
B) a London bank loans out 90 percent of a eurodollar deposit to a firm which then Deposits the eurodollars in a French bank account (in dollars)
C) a French businessman opens up a bank account in Zurich, denominated in French Francs
D) all of the above

Question

Quizplus · Accepted Answer

Each of the scenarios described involves the creation or movement of funds in a manner that contributes to the creation or expansion of eurocurrency markets. A) involves the deposit of U.S. dollars in a bank outside the U.S., creating a eurodollar deposit. B) describes the process of re-depositing eurodollars in another bank, which is a fundamental activity in the eurocurrency market. C) involves depositing a non-domestic currency (French Francs) in a bank outside of its country of origin, which is another form of eurocurrency deposit.

Which One of the Following Gives Rise to a New