In general, risk contributes to the domestic spread exceeding the external spread. In domestic markets government agencies help ensure the sound performance of domestic financial institutions, whereas the Eurocurrency markets are largely unregulated, with no central bank ready to come to the rescue. There is an additional risk in international transac- tions in that investment funds are subject to control by the country of currency denomination (when it is time for repayment) as well as the country of the deposit bank. For instance, suppose a U.S. firm has a U.S. dollar bank deposit in Hong Kong.