The interest rate paid on Eurocurrency deposits depends on the particular bank's lending rate and on rates available on its domestic money market instruments.

Question

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The interest rate paid on Eurocurrency deposits is typically linked to the bank's lending rate and the rates it pays on domestic money market instruments. This is because banks need to attract funds to lend out in various markets, and the rates they offer on deposits are influenced by the rates they can earn on their lending activities and from investments in domestic money markets.

The Interest Rate Paid on Eurocurrency Deposits Depends on the Particular