One reason Eurocurrency deposit rates are higher than domestic rates is due to the fact that
A)they have no relationship to domestic rates
B)they must be higher to attract domestic depositors
C)most borrowers are well-known
D)a smaller percentage of deposits can be lent out

Question

Quizplus · Accepted Answer

Eurocurrency deposit rates often need to be higher to attract depositors away from their domestic markets. This is because depositing money in a foreign currency or in the international markets can carry additional risks, such as currency risk, so higher rates are offered as an incentive.

One Reason Eurocurrency Deposit Rates Are Higher Than Domestic Rates