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The Currency Choice and its Relation to the Interest Rate

In: The New Euromarkets

Author

Listed:
  • Brian Scott Quinn

    (University of Reading)

Abstract

A eurobond is a financial aecet which is sold to investors in a number of countries. The value of such an asset must be expressed in terms of some standard. Possible standards are gold, a currency or a combination of a number of currencies, or an artificial ‘unit of account’. In most countries there are laws prohibiting ‘gold clauses’ in financial contracts, thus ruling out the possibility of denominating a bond in units of gold. Thus only the latter two alternatives can be used in practice. In the case of an artificial unit of account it is still necessary to use a domestic currency or currencies to make or receive payments, and thus the value of even an artificial unit must be related in some way to domestic currencies.

Suggested Citation

  • Brian Scott Quinn, 1975. "The Currency Choice and its Relation to the Interest Rate," Palgrave Macmillan Books, in: The New Euromarkets, chapter 9, pages 101-111, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-02603-6_9
    DOI: 10.1007/978-1-349-02603-6_9
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