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As the whole levels of economic are rising, the notion of people and companies about money are more important. Banking is financial institutions to absorb public deposits, issuing loans and bills discounted, and other processing. It through deposits, loans, foreign exchange, savings and other business, take the credit intermediary financial institutions. Casu (2006) said: “banks have three roles that are size transformation, maturity transformation, and risk transformation to collect funds from units in surplus and lend funds to unit in deficit.”(Introduction to banking, 2006, P: 7)
So eurobanking is financial intermediaries that handling services for Eurocurrency market. It has global services for each branches and customers. Besides, it uses modern communication tools, and relies on its advanced technology and management to control transaction for Eurocurrency market. In addition, supply and demand of European currencies was linked to form a number of famous financial centers. Therefore, eurobanking is a tool to help European currency becoming an efficient and getting a high degree of global integration.
Summing up, although European currency is a virtual market, eurobanking can help Europe market, and bring effectively working. And the purpose of eurobanking is to provide an opportunity for members to improve for European currency financial markets.
Facing on economic forces, there are many sides to stimulated and sustained eurobanking. For example, there are comparative and competitive advantages, economies of clustering and agglomeration, location economies, globalisation, and internationalisation to influence and protect eurobanking.
Firstly, from the characteristic of Eurocurrency market, the relationship between euronbanking and economic forces can be shown. Eurocurrency market is a very attractive market. It is very different between other market and financial markets in Western countries, as well as traditional international financial markets. Besides it is a free international financial market, and has the following main features of:
(1) It is operate very free. Because the European currency market is countries not obey to any restrictions on government regulation and taxation of the market. For example, it is a flexible loan terms, then borrower does not limit uses. Therefore, this market is not only consistent with the needs of multinational companies and importers and exporters, but also in line with many Western countries and developing countries.
(2) Its huge funds. The money for Euro market funds is come from around the world. And it could fit a variety of different types of countries and their banks, businesses and the different purposes for different needs.
(3) Scheduling flexibility. Euro market is simplicity, and it has a strong competitive. Because these funds without any jurisdiction. The market and the Western countries comparing with the traditional, there is a strong competitive.
(4) A unique interest rate system. Its deposit rates relatively high but lending interest rates are relatively low. It is because it is not subject on the maximum interest rates on deposits. Therefore, the deposits and borrowers have same attractive for European market.
(5) “A “wholesale market.” its operating is in the majority of transactions between banks. Interbank lending of funds between the money market operations in Europe accounted for a large proportion of the total. It is also a wholesale market, as most borrowers and depositors are some big clients, Therefore, a great amount of each transaction, generally vary from a few million, more than you can reach hundreds of millions or even billions of dollars.”
From this information, we will know eurobanking is a financial intermediary to help the Eurocurrency to get its goal and great benefit.
So the eurobanking also has these feature that are free operate, huge funds, scheduling flexibility, and unique interest rate of euro marke.
There is bar table figure 13.4 to show income composition of the eurobanking. At begin eurobanks have over 70 per cent net interest income of their revenue from business loans in 1994, but when 2003 the figure had declined to 60 per cent. From this table eurobanking can help European market to operate.John’s opinion (2001)is that eurobanking have large number of small local and regional banks ,however ,with substantial branch operations serving together with the main commercial banks and specialist lenders, a wide range of banking customer.(European banking 2001 P:11)
Secondly, Eurobanking is different from other bank about the structure and theory, because it has different background between European Union and other country. In the same part, they are enterprise of running money, and their objective is giving convenient to the social, which is a very important financial institutions member.
On the other hand, we can see the different part that the target of eurobank is deposits into currency funds that are idle in the community and micro-currency to savings together. Then in the way of loans to lent companies that need to get European currencies to use. In here, eurobank is as an intermediary to lenders and borrowers to act. What’s more, it is supply many services for a loan between residents and non-residents. It stands for eurobanking is especially department to bring the global economic development and social progress in an all-around way for European market. Because eurobanking have many feature that others banking mot have. For example, it’s operated very free, no government limit, and services the whole world.
Thirdly, in this part is Economies of clustering and agglomeration and eurobanking. We know European markets are component by globalisation and internationalisation banks. These banks have been pan-called “Eurobank.” So it is not an institution, but it likes function. European market operations consist of two parts: one is the bank lending; another part of non-bank transactions. From the loan funds, methods and operational nature can be divided into money markets in Europe and the European capital markets.
Therefore, eurobanking through many different ways, like get concert other banks and offer different services. For instance, it gives international lending business tends to spread, make sources of bank funds from sporadic to large. And use the way about often after the first, provides loans to borrowing, lending interest rates to borrow the interest rate changes with the periodic adjustment.
From these methods, European market can assimilate many foreign banks funds and running them. Eurobanking also spend on long-term loans buyer’s credits and European bonds to offer, so the volume of business increased dramatically. Besides, it often gives the borrower to sign a loan contract, and at a later time to borrow money from other places.
Finally¼Œtechnological have transformed most industrial sectors, for the technological of banking as information-based firms to deal monetary ,so it is necessary for European market. Casu (2006) proposed: “the technological development of eurobanking can supply saving in the cost and time of providing financial services and increased revenues through the development of an array of new financial product.” And there are two factors to describe the technological innovation of eurobanking. First, the production function in banking has become more capital-intensive, given that the share of non-staff operating costs has increased in most of the European systems. Second diffusion of in formation technology is transforming banking delivery channels. (Introduction to banking, 2006, P: 361-363)
Therefore eurobanking are well placed to take advantage of technological advances. And it can help banking chose the good way to improve their own innovative. What’s more it can purchase bespoke best-practice system and implement tem with less disruption.
Eurobanking is good place to solve and process the economic services about is not existing in the country market profession. And the market transaction of European is the object of the European Monetary. To determine whether the amount of monetary is Europe’s money, it will depend on whether the payment of the deposit reserve requirement. In general, this work is done by eurobaking. Therefore, eurobaking is management the bank monetary liabilities the European currency non-resident offshore. Furthermore, it also manages European currencies in the non-residents and non-resident domestic currency loans. Europe is mainly engaged in non-residents and non-resident lending has become separated from the domestic financial markets, the offshore financial market. It can be said that the traditional international financial markets are the external part of the world’s financial markets, while European currencies market is outside the part of the world’s financial markets.
By these informantion about characteristic, different, clustering agglomeration, and technological of eurobanking, we can intensively to know what is eurobanking. It is financial intermediaries that handling the Eurocurrency market. And it can bring efficiency to Eurocurrency. What’s more, it has many especially characteristic than other banking. Likely, eurobanking is a tool to help European currency becoming an efficient and getting a high degree of global integration. And it is not limited on some rate and banking services.
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