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A post-1950s phenomenon, these are the dollar balances in American banks, in the names of various European persons or companies, which are used to finance international trade without ever leaving the banks in which they are held.

For many years the euro-dollar has been the closest thing to an international currency in Europe. Euro-dollars are really only a specific instance of the genus eurocurrency, but they assumed far more significance than euro-francs or eurodeutschmarks because of the strength of. and immense demand for, the dollar in international trade. Until relatively recently, dollars were almost synonymous with gold and the British national reserves were referred to as the 'gold-and-dollar reserves'. After 1986 the euro-dollar lost much of its old trading value as the strength of other currencies (particularly the deutschmark) increased, while that of the dollar fell.

From 1998 the Euro started its introduction to replace the national currency units within the member states of the European Union.

Reference: The Penguin Business Dictionary, 3rd edt.