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SUMMARY:Bonds without borders: the Eurobond market - Chris O’Malley
DTSTART:20260216T170000Z
DTEND:20260216T183000Z
UID:TALK242662@talks.cam.ac.uk
CONTACT:Dr Duncan Needham
DESCRIPTION:In the United States the second Trump administration has conti
 nued to pursue its ‘America First’ philosophy and its target of signif
 icantly reducing the US trade deficit.  The subsequent imposition of a hos
 t of protectionist tariff policies have shaken the foundations of global t
 rade and rattled the financial markets.  What might be the long-term effec
 ts of such policies?  Back in the early 1960s the principal concern of the
  Kennedy administration was the ever-growing US Balance of Payments defici
 t and the continuing flow of dollars outside the United States.  Such was 
 the flow of dollars into Europe that the significant balances accumulating
  became referred to as ‘Eurodollars’.  As a protectionist measure in 1
 963 JFK imposed the ‘Interest Equalization Tax’ (IET) to curb the U.S.
  balance-of-payments deficit. The tax made it less profitable for U.S. inv
 estors to invest abroad\, thereby keeping capital within the domestic econ
 omy.  This modest protectionist measure had significant consequences for t
 he global financial markets. As the US securities market was now closed to
  foreign investors an alternative market had to be found if the major fina
 ncing needs of international borrowers were to be met.  What about the vas
 t pool of Eurodollars?\n\nIn time\, through the endeavours of an extraordi
 nary group of international financiers overcoming myriad regulatory and ta
 x barriers\, these offshore dollars provided the means to raise internatio
 nal finance on a cross-border basis.  This so-called ‘Eurobond’ market
  tapped international investors regardless of their domicile\, market or c
 urrency and laid the foundations of today’s global cross-border markets.
   Sadly\, the last quarter of 2025 saw the passing of some significant pio
 neering figures in the development of the world’s largest international 
 capital market. Hans Jeorg Rudloff masterminded the transition of the Euro
 bond market from a largely retail investor market\, to a market financing 
 supranationals\, sovereigns and major corporations satisfying the appetite
 s of the world’s major institutional investors.   Eugene Rotberg\, forme
 rly Treasurer of The World Bank\, would undertake the first currency and i
 nterest rate swap transaction\, heralding an era of astonishing flexibilit
 y for both borrowers and investors to meet their international financing a
 nd investment needs.  The derivative markets were born and would grow expo
 nentially. In time the markets would become a victim of their own success 
 and excesses. In more modern times regulators would have to rein in those 
 excesses\, but always with a view that the underlying cross border bond ma
 rket must be preserved as the cornerstone of international financing.
LOCATION:John Bradfield Room\, Darwin College and Zoom
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