Over the past twenty years there has been a dramatic increase in the practice of banks located in one country accepting deposits denominated in the currency of another country. Initially, the banks involved were mainly located in western Europe and hence they were often referred to as “eurobanks” and the network which they comprised was called the Eurocurrency System. It is estimated today that the assets available to the System exceed †200 billion. Originally, the U.S. dollar was the main currency involved, but deposits denominated in deutsche Marks and other European currencies are also becoming important. In addition, the prefix “euro” is now somewhat misleading, since many of the banks engaging in this practice are located in the Bahamas, Singapore, Bahrain and other non-European countries. However, the bulk of activity does involve financial institutions in western Europe, so for convenience I shall continue to refer to the system as the Eurocurrency System.