Parallel Money Markets

Abstract

We have already charted the relationship between the deposit banks and the discount market, which until about 1955 was the only money market in London. In this chapter we are going to look at the various parallel money markets which grew up alongside the secondary banking system, and contributed so much to the growth of that separate banking system. We shall look at the markets in euro-dollars and other euro-currencies alongside the markets in sterling because the methods of operation are very similar in both sterling and currencies and because the development of the euro-dollar market was to some extent the engine which caused the growth of the secondary banking system. Our concern here will be only with the London markets for deposits and other claims denominated in non-sterling currencies; we shall go on to deal with the international aspects of the euro-dollar market in Chapter 11.