The Euromarket was a major catalyst that accelerated Forex trading because of the rapidly developing Eurodollar market. This occurred because of the vast amounts of US dollars which were deposited in the banks outside of the US. On the other hand, the Euromarkets had their own assets deposited outside of the country of origin as well.

The Eurodollar market started sometime in the 1950s when Russia’s US dollar revenues derived from oil, were deposited outside of the United States because of the Russian government’s fear of their accounts getting frozen by the US regulators. Remember, this was at the peak of the Cold War and it was common practice at that time to freeze Russian or Communist accounts deposited within the mainland in a bid to deplete these funds.

The US dollar deposits outside of the mainland US gave rise to a vast pool of dollars deposited offshore, amounting several hundreds of millions, out of the reach and control of the US authorities. This prompted the US legislators to make up and impose laws that would restrict the dollar lending to foreigners and other countries.

The Euromarkets became very attractive to those same foreigners because they could easily borrow the money with less hassle and paper work. Also, there were no regulations that prohibited them from borrowing these US dollars, and the Euro banks offered better and higher yields.

Eventually, from the 1980s and beyond, the US companies decided to follow their European counterparts by borrowing US dollars from the offshore banks. The Euromarkets, they found, was more beneficial for them as they offered short term loans and opened their gates wide for potential imports and exports.

The principal offshore market continues to be London. By the 1980s, London became the center for the Eurodollar market when their banks stated lending dollars as an alternative to the British pound so they could maintain their lead position in the world of global finance.

London is also geographically convenient for it can operate on two markets at the same time, the Asian market and the American markets. This convenience is instrumental in the preservations of their Euromarket dominance.