Offshore currencies are employed by countries to enable Forex trading of their currencies, keeping control over the capital flow through its geographical boundaries at the same time. In some cases there are foreign exchange or banking regulations which require onshore capital controls, hence the same currency is traded offshore with different regulatory regime.
Eurodollars are the offshore bank deposits denominated in US dollars. Being outside the United States, these deposits don’t fall under the jurisdiction of Federal Reserve. As liquidity on Eurodollar is not guaranteed by Feds, Eurodollars are considered riskier hence fetching higher interest rate.
Historically these deposits were used by European banks after the WW2, thus acquiring Euro- prefix. Currently any dollar deposit located outside United States is called Eurodollar.
China’s offshore currency CNH was introduced as a way to internationalise CNY, the onshore currency without opening up China’s capital account.
In 2010 People’s Bank Of China and Hong Kong Monetary Authority jointly announced the introduction of offshore CNH deliverable in Hong Kong. Because of the capital controls, onshore currency can not freely leave the country, and the exchange between CNY and CNH is controlled by China.
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