Euro Feds
Euro Feds. You know...the Feds of the euro (sort of, but not really).
Euro Feds refer to the transactions between U.S. banks and foreign banks dealing in euros, a.k.a "eurodollar" transactions.
The two major clearinghouses for eurodollar transactions are The Clearinghouse Interbank Payments System (CHIPS) and Fedwire (owned and operated by the Fed, a.k.a. the U.S. Federal Reserve).
What's all the fuss with these Euro Feds? Well, it's a way banks make money. When banks have too much money on their hands (you feel for them, right?), they want to loan it out so they can make interest on it (yep, that's the same stuff they're doing with the money in your checking account right now). If they don't have enough money (which they need enough of to at least fulfill legal reserve requirements), then they ask for a loan from other banks (or the Fed, if they're SOL). Euro Feds allows this interbank loaning to happen on a global level.
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Econ: What is the European Monetary Syst...7 Views
and finance Allah shmoop What is the European monetary system
Or to put it another way where do euros come
from Most currencies cover a single country like the U
S Has the dollar The U K has the pound
of Zambia has the kwacha and so on But one
of the world's major currencies covers an entire region the
euro It's used in twenty three countries throughout Europe nineteen
countries within the European Union and four small ones outside
of the official U from France and Germany to Slovakia
and Luxemburg That's where the euro plays in the sun
When James Bond plays baccarat in Monaco he places his
bets in euros When the Knights of Malta get their
armor repaired well they pay in euros by castle in
France are Chocola in Belgium or sauerkraut in Germany or
whatever it is they eat in Portugal Yeah you're using
euros Despite the fact that it's one of the world's
widest circulating currencies the euro is actually one of the
youngest It hasn't been around for a very long and
by not around that long while we mean like it
wasn't here in the nineteen nineties So while friends dominated
TV and flannel shirts dominated fashion and Britney Spears dominated
TRL while Europe was dominated by a patchwork of currencies
France had the Frank Germany had the deutschmark Italy had
the lira in Zambia still had the kwacha well the
countries of the eurozone didn't exactly have smooth courtship In
fact they marked the first couple of decades of the
twentieth century with the biggest wars in history up to
that point and then ended the century there with a
common currency So how did they do this Well quick
timeline From nineteen fourteen to nineteen eighteen most of the
countries of Europe fought against each other in World War
I In the nineteen twenties Germany suffered through a massive
inflation and a painful political dislocation brought on by their
defeat in the war Other countries faced their own traumas
Fascism rampant in Italy paranoia and political division in France
By the nineteen thirties that continent suffered through the ravages
of the Great Depression and the rise of the Nazis
From nineteen thirty nine to nineteen forty five another war
Well this one was worse than the previous one That
conflict WW two left Everyone in Europe bombed out and
broke the center of the world economy then shifted to
the United States Meanwhile Europe split into spheres of influence
US dominated area in the West and the communist U
S S R dominated the area in the east So
for half a century or so an unending stream of
wars economic dislocation rivalry and while political confrontation marked relations
on the continent hardly a place ripe for currency unification
So what happened Well here's the short answer Eastern Europe
started instituting more socialist economic policies right after World War
Two Meanwhile the Western countries especially France the UK and
what was then known as West Germany started opening up
trade in a new series of treaties from the nineteen
fifties In the nineteen nineties the nations of Europe stopped
being openly compay edited Justus They were adding expensive social
programs Meanwhile the larger economies experienced an influx of these
huge migration policy issues The migrants came from other European
countries and largely from former colonies in Asia and Africa
will eventually none of the major European countries could really
afford to operate individually and by the late nineteen eighties
the governments of the communist countries in Eastern Europe started
to collapse The new regimes in these former Iron Curtain
nations looked to join the growing European wide market East
and West Germany reunited The former communist countries entered the
trade treaties The European Union became one of the world's
key economic organizations Pressure for a single currency began to
grow well in nineteen ninety to the members of the
European Community signed a treaty that pave the way for
a single currency A series of treaties followed until the
euro was introduced on January first nineteen ninety nine and
by two thousand two the first countries had completed a
changeover from their previous currencies Lesson here Don't LOSE HOPE
ONE DAYS Great war can become tomorrow's free trade Unified
currency zone Well a single Middle East currencies that ever
coming India Pakistan Trade Zone A gift card that works
at both Yankee Stadium and Fenway Park Yeah you never
know In a few decades maybe