Euro currency

The Euro currency is that currency or currency that is used in another country other than the one of its origin. Its use is one of the bases of international trade and foreign investment of countries.

Euro currency

In practice, the creation of a Eurocurrency is simple, since it arises simply by transferring certain funds from a national account in the currency of that country to another bank located in a foreign country.

Another possible alternative is for said deposit to be sent to another office of the same bank of origin but which is in another country.

The most common is that a Euro currency has a nature or value of the main and most widespread currencies in the world, such as the US dollar or the euro. In addition, the holders or actors that operate with this type of currency are individuals, companies or institutions that for a certain period of time reside in a country other than their own.

In this way, it is possible to identify the type of Eurocurrency in particular that we are focusing on according to its denomination, which always consists of the prefix "euro" at the beginning and then the name of the currency of the country of origin. An example would be the Eurodollar, if there is a deposit valued in dollars under the control of a Spanish bank.

The fact that this concept has the word "euro" in its name is due to the origin of this type of treatment with currencies, since initially this phenomenon took place within the European economic sphere. However, at present this definition is extended to all types of world currencies wherever they are located.

In this sense, those bank deposits valued in a currency from another part of the world can be considered as Eurocurrency. For example, we would talk about a deposit of a certain amount of euros in a bank located in Mexico.

Usefulness of the Eurocurrency

As has been said before, these currencies can be used to carry out multiple types of economic operation, such as investment in other countries. A very common form in day-to-day finance is the granting of loans in a foreign currency. For this reason, its greatest relevance is within international trade, within the payment methods of economic activities carried out in all corners of the world.

The Eurocurrency market is the space for the exchange of funds valued in foreign currencies that operate in different territories from their origin. In practice it is a money market.