Which of the following are the characteristics of the Euro Currency market?

A. The euro currency market does not have geographical limits

B. The euro currency market is unregulated

C. The euro currency market does not have deposit insurance

D. There are no restrictions on the maximum interest payable or chargeable.

E. The euro currency market does not attract CRR and SLR restrictions.

Choose the most appropriate answer from the options given below:

The correct answer is E, C, and A only

Key Points  The correct options are A, C, and E., The characteristics of the Euro Currency Market would be:

A. The euro currency market does not have geographical limits: The term Eurocurrency refers to any currency that is deposited in a bank outside its country of origin, which means the market is not constrained to a specific geographical location.

C. The euro currency market does not have deposit insurance: As the euro currency market operates beyond the regulatory influence of any single nation, it indeed does not come with safety nets typically associated with domestic banking, such as deposit insurance.

E. The euro currency market does not attract CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) restrictions: Since the market is beyond the control of individual countries’ central banks, the deposited funds in this market do not attract CRR and SLR requirements, offering a cost advantage for banks.

Additional Information  Here are some additional characteristics regarding the Euro Currency Market:

1. Diversity of Participants: The Euro Currency Market includes a diverse group of participants such as multinational corporations, global banks, governments, and private individuals. This diversity contributes to the market's liquidity and efficiency.
2. Appreciable Returns: This market generally offers more attractive interest rates compared to domestic markets, mainly due to the lack of regulatory costs and reserve requirements. As a result, investors can often enjoy higher returns.
3. Currency variety: Even though it's referred to as the "Euro Currency Market," the name does not restrict its dealings to the Euro alone. Any major currency can be dealt with in this market, such as the U.S. dollar, British pound, etc.
4. Large Transaction Volumes: Given its global nature, the market typically sees large transaction volumes. Banks and corporations often participate in the Euro Currency Market to fulfill their large borrowing requirements or to place substantial deposits.
5. Higher Risk: While the Euro Currency Market can offer higher returns, it also comes with higher risk, primarily because it lacks the safeguards and insurance typical of domestic banking systems due to its unregulated nature.
6. Disintermediation: This occurs when depositors directly place their deposits in the Euro Currency Market rather than through domestic banks. The term refers to the diversion of funds from domestic markets which offer lower interest rates to Euro Currency Markets that offer higher rates.
7. 24-Hour Market: As the Euro Currency Market operates beyond geographical limits, it effectively functions as a 24-hour market, accommodating different time zones across the world