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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
- UGC NET
- Economics
Can somebody pls explain it .
(d) The German Mark 16. Which of the following is an adverse effect of Euro Currency Market? (a) nternational Capital Market JDecrease in World's Nominal Money Supply (c) Integration of International Capital Markets d Meeting BOP Deficit
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Eduncle Best Answer
Dear Anushka,
Greetings!!
Correct Answer is Option - C
Euro currency market is same like exchange money. It would be cause of increase money supply not decrease. So the right answer is the integration of international capital markets. It's deals with risks and updates.
Effects of Euro Dollar Market on International Financial System:
1. The position of the dollar has been strengthened temporarily since its operations of borrowing of dollars have become more profitable rather than its holdings.
2. It facilitates the financing of a balance of payments surpluses and deficits. Especially, countries having a deficit balance of payments tend to borrow funds from the Euro-dollar market, thereby lightening the pressure on their foreign exchange reserves.
3. It has promoted international monetary cooperation.
4. Over the last decade, the growth of the Euro-dollar has helped in easing of the world liquidity problem.
Thank you for asking your query.