Eurocurrency — Definition Explained Simply | Examples & Role

Eurocurrency is a national currency held in bank accounts outside the issuing country. For example, US dollars placed on deposits in European or Asian banks are called Eurodollars, while euros held in banks outside the eurozone are sometimes referred to as Euroeuros. The term is not related to the European Union’s currency (euro) but refers to the fact that the money is kept outside its national jurisdiction.

Eurocurrencies emerged in the 1950s–60s and quickly spread due to the reduction of currency restrictions and the expansion of international trade. These funds are actively used for lending, financing foreign trade transactions, and issuing international loans.

Key features of Eurocurrency

• Held abroad — currency stored outside its issuing country.
• No direct control — such funds are not subject to the domestic regulation of the issuing country’s central bank.
• High liquidity — widely used in international settlements and lending.
• Independence from national law — transactions are conducted under international rules and agreements.

Eurocurrency vs. Euro

It is important not to confuse Eurocurrency with the euro. The euro is the single currency of the European Union, while Eurocurrency is any currency deposited outside its country of origin. For example, US dollars in London are Eurodollars, and Japanese yen in New York are Euroyen.

Examples of Eurocurrencies

• Eurodollars (USD in banks in Europe or Asia).
• Euroyen (JPY outside Japan).
• Euroeuros (EUR outside the eurozone).