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A major catalyst to the acceleration of Forex – FX (foreign exchange) trading wasthe rapid development of the euro dollar market, where US dollar are deposited in Banks outsides the US. Similarly, euro markets are those where assets are deposited outside the currency of origin. The euro dollar market first came into being in the 1950’s when Russia’s oil revenue, all in dollars, was deposited outsides the control of US authorities.

US government imposed laws to restrict dollar lending to foreigners. Euro market were particularly attractive because they had far less regulations and offered higher yields. From the Late 1980’s onwards, US companies began to borrow offshore, finding Euro markets a beneficial center for holding excess liquidity, providing short term loans and financing imports and exports.

London was, and remains the principal offshore market. In the 1980’s, it became the key center in the Euro dollar market when British banks began lending dollars as an alternative to Pounds in order to maintain their leading position an global finance. London’s convenient geographical location (operating during Asian and American markets) is also instrument in preserving its dominance in the euro market.