Since the Eurodollar market deals with such large magnitudes, it is
understandable that economists and politicians are concerned about the
effects the Eurodollar market can have on domestic markets. In the
United States, Eurodollar deposits are counted in the M3 definition of
the money supply. Measures of the U.S. money supply are used by economists to evaluate the resources available to the public for spending.
Eurodollars are not spendable money but, instead, are money substitutes
like time deposits in a domestic bank. Because Eurodollars do not serve
as a means of payment, Eurobanks are not able to create money as banks
can in a domestic setting. Eurobanks are essentially intermediaries;
they accept deposits and then loan these deposits.