Debt, Deregulation and Financial Crises
Chapter 2: The euro market erodes US financial structure
The shift from a bank-based financial system to a market-based system began with the creation of the unregulated Eurocurrency market in the 1960s. It accommodated the key currency international monetary system by providing foreign exchange and cross-border transactions denominated in currencies outside the borders of the countries that issued them. Institutions’ reliance on borrowing from, lending to, and dealing in derivatives with other financial institutions created a web of interconnectedness in the external market that was first tested by the failure of Franklin National Bank in 1975.
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