We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Eurobank?

By Deanira Bong
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

The prefix "euro" in "eurobank" has nothing to do with Europe or the Euro currency; it is a common prefix for financial instruments or institutions that deal with currencies other than the local currency. A eurobank refers to a bank that makes transactions in foreign currencies, including deposits and loans. For example, an Australian bank that holds deposits in US Dollars (USD) or a Brazilian bank extending loans in Japanese Yen (YPY). A eurobank can operate in its own country while handling foreign currencies or operate as a foreign branch in another country, handling that country's currency. Eurobanks facilitate movement of financial capital between various countries by making it easier to obtain and keep foreign currencies.

In the past, few financial institutions would handle foreign currencies. The first large inter-currency transaction occurred shortly after World War II. Communist governments became worried that the US government would freeze their funds in the US and decided to transfer their USD funds to banks under their control.

As the USD became an important currency for international trade, financial institutions in other countries began stocking up on the USD. The eurobanks outside the USA often offered more attractive interest rates on USD deposits and loans compared to banks in the US because they don't have to comply with US banking regulations, such as maintaining a minimum reserve amount, payment of Federal Deposit Insurance Corporation (FDIC) fees and following rules that protect competition between banks. The eurobank became a popular financial institution that offers both accessibility to foreign funds and low-cost service.

Many eurobank transactions involve transferring deposits to and from another financial institution. For example, a businessman earns a payment in USD and deposits it to a US bank account. He then realizes that a bank in London offers higher rates of return on USD deposits, so he transfers his funds to the bank in London.

A eurobank often allows a client to borrow an approved amount of a certain currency as well. The eurobank usually charges an interest on the borrowed amount, at a floating rate that is linked to the London Interbank Offered Rate (LIBOR). It also charges a fee on the unused portion of the line of credit, usually less than 1 percent of the unused funds. The eurobank sometimes allows the borrower to switch from one currency to another on certain dates. The borrower can then match the currencies with his or her cash flows, adjusting his or her exposure to risks related to fluctuations in currency exchange rates.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.