Eurocredit

economic-dictionary

Eurocredit is an international operation through which a financial entity or institution grants a loan to an individual, company, institution or government and in a currency other than the one in progress in said territory.

This type of credit or bank loan is usually made through Eurocurrencies, that is to say, it is the deposits valued in currency or foreign currency that make up the loans to be delivered in this type of banking operations.

As with the Eurocurrency concept, the use of the «euro» prefix is ‚Äč‚Äčexplained by the origin and expansion in the Eurozone of this type of credit. However, the definition has been maintained over time and covers any territory and currency in the world.

On the other hand, the most common thing in economic life is that Eurocredits are granted under previously fixed maturities and located within the medium and long term. Another important detail of this type of operation is that it is accompanied by its corresponding variable interest rate that affects the repayment of the loan. This rate is normally established with attention to the returns of the different currencies in the market and their evolution, as well as the deposits valued in them.

It is important to highlight that Eurocredits have the requirement that the beneficiary of the same must be an agent not belonging to the interbank market. A basic example of Eurocredit is for example a loan granted by a French bank valued in dollars, for example.

Unionized Eurocredit

It is quite common the possibility that the eurocredit is granted by an association or group of banks, taking this phenomenon the denomination of unionized eurocredit.

This type of credit normally arises as a result of seeking to reduce risks or, at least, to distribute these among the participating entities, especially if we are talking about large amounts of money to be lent.

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