Euro Feds

Euro Feds. You know...the Feds of the euro (sort of, but not really).

Euro Feds refer to the transactions between U.S. banks and foreign banks dealing in euros, a.k.a "eurodollar" transactions.

The two major clearinghouses for eurodollar transactions are The Clearinghouse Interbank Payments System (CHIPS) and Fedwire (owned and operated by the Fed, a.k.a. the U.S. Federal Reserve).

What's all the fuss with these Euro Feds? Well, it's a way banks make money. When banks have too much money on their hands (you feel for them, right?), they want to loan it out so they can make interest on it (yep, that's the same stuff they're doing with the money in your checking account right now). If they don't have enough money (which they need enough of to at least fulfill legal reserve requirements), then they ask for a loan from other banks (or the Fed, if they're SOL). Euro Feds allows this interbank loaning to happen on a global level.