The spread between the Eurocurrency deposit rate and the Eurocurrency lending rate is more than the spread between the domestic deposit and lending rates.

Question

Quizplus · Accepted Answer

Banks offer higher interest rates on Eurocurrency deposits than on deposits made in the home currency. The lack of regulation also allows banks to charge borrowers a lower interest rate for Eurocurrency borrowings than for borrowings in the home currency. This makes the spread between the Eurocurrency deposit rate and the Eurocurrency lending rate less than the spread between the domestic deposit and lending rates.

The Spread Between the Eurocurrency Deposit Rate and the Eurocurrency