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Finance from A to Z: Week 24 (X)

Finance from A to Z: Week 24 (X)

X stands for Xenocurrency

What Is a Xenocurrency?

The term xenocurrency refers to any currency that is traded in markets outside of its domestic borders, deriving its name from the Greek prefix "xeno," meaning foreign. Having said that, the word "xenocurrency" is now widely used to refer to "euro currency," and the terms "xeno-market" and "eurocurrency-market" are also interchangeable. A money market that deals in xenocurrency is referred to as the eurocurrency market.

The eurocurrency market is used by banks, multinational organizations, mutual funds, and hedge funds. These organizations take advantage of the market in order to avoid compliance with legal obligations, tax rules, and interest rate ceilings frequently seen in domestic banking, notably in the United States.

The history of the term began in 1974, when the Austrian-American economist Fritz Machlup, who served as President of the International Economic Association from 1971 to 1974, introduced it. Machlup used the phrase to refer to deposits and loans denominated in currencies other than that of the bank’s home country.

In the present day, however, the use of the term xenocurrency is infrequent as the prefix xeno can have negative connotations in modern English. Xenophobia, for example, means an irrational fear of or hatred toward foreigners. Foreign currency, therefore, has become the preferred term for referring to non-domestic currencies, with eurocurrency being a close second.

If you wish to learn more about how foreign currencies interact with one another in the foreign exchange market, please take the time to read our article on the matter F stands for Forex!

That’s all for this week, thank you for taking the time to read this brief account on xenocurrencies, and see you in the next one!

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