Capital Investment

Euromoney markets serve three vital functions in international finance. First, they are particularly attractive source of working capital for multinational corporations. They are attractive because the rates on Euromoney loans tend to be lower than in the domestic economy. The second function of the Eurocurrency markets is serving as storehouses for excess liquidity. Corporations, international banks, and central banks, find it convenient to hold their idle funds in these markets and earn highly competitive rates of return. Finally, the Eurocurrency markets facilitate international trade. Even when trade is financed by letters of credit, bank finds it attractive to use Eurocurrency loans to make payments. Without this source of capital at very competitive rates, the volume of international trade would probably be lower because of the higher cost of less flexible financing arrangements.
The economic units may be unable or unwilling to provide the full account of funds to purchase the capital assets. Instead they may prefer to pay for capital assets in part out of future revenues generated by the production from the asset itself. If this is the case, the economic units must enter the capital market as primary borrowers by issuing capital market claims such as stocks and bonds that are secured by the value of future productions expected from the capital asset.
A financial market is a place where financial transactions take place. When a financial transaction takes place between a resident of a country and a non-resident, it is an international financial transaction, naturally, the place where the transaction is traded is an international financial market.