What is the function of the international money markets? Briefly describe the reasons for the development and growth of the European money market.

Step 1

In December 1971, the International Monetary Market (IMM) was introduced and officially introduced in May 1972, but its origins can be traced to the end of Bretton Woods via the 1971 Smithsonian Deal and the restriction of the convertibility of the United States dollar to gold by Nixon.

Step 2

The global money market's purpose is to produce the flow of international money effectively from companies or states with surplus funds to those in requirement of funds.

Step 3

The development of the European money market was primarily due to United States legislation limiting United states banks' international lending; and controlled ceilings imposed on dollar deposit interest rates in the united states that encourage deposits to be imposed on the Eurocurrency market where there were no ceilings. Short-term deposits and mortgages are the focus of the global money market. While the foreign credit market has been used to tap medium-term credit, the global bond market is utilized to raise long-term funding through the issuance of long-term bonds