If You Ask Me: A Global Banker Reflects on Our Times
Wriston, Walter B.
2007
The Elusive Eurodollar
We read often about the vast Eurodollar market and how it's a threat to the U.S. economy because no one regulates it. Can you put a number on that for us and give us your views on it? | |
There's something over $600 billion in the Eurodollar market, we think. I say "we think" because no one knows how many times the dog is counted when it runs by the door. If Citibank places one U.S. dollar with Barclays in London, and Barclays places it with Credit Swisse, which places it with Societe Generale, which places it with Chase Bank, how many times did the dog run by the door? Nobody really knows. | |
I have enormous respect for the Eurodollar market. The Federal Reserve for years has dreamed about regulating that market on the principle that if it's not regulated, it's probably injurious to someone's health. That's the attitude here. Happily, no one knows how to do it. They've been trying for twenty years, and fortunately they can't. | |
In Britain, the Bank of England gets a hundred thousand financial jobs out of the Eurodollar market, so they're dead set against regulation. Their excuse is that the market works. Which it does. Never in history have so many financial assets been transferred in so short a time as happened during the 1973 OPEC embargo. Without the Eurodollar market, the world financial system would have gone down. Everybody said it was going to, especially the experts who have no use for any free marketplace. But it didn't. | |