Replying to Avatar Juraj

Eurodollar bank does not usually have an account with the FED. Otherwise they are part of normal dollar system.

Fun thing is - swift does not actually move the money, it's a messaging protocol to agree on how the movement is done.
Avatar
Diacone Frost 8mo ago 💬 1

well, not directly, but there must be a corresponding bank (account) which does. Otherwise they couldn't endup in a US bank, could they?

(I know that swift is more of a protocol).

How they settle balance sheets is probably up to them, isn't it? It's really been a while since I read how all that works.

Reply to this note

Please Login to reply.

Discussion

Avatar
Juraj 8mo ago

Yes. Banks have accounts with other banks with balance. They can top them up short term with repo, long term with fx trade. It's basically a deposit account called nostro account. The key here is that eurodollars switch to dollars backed by reserves (central bank money) there.