Question

• What is Libor and what are Eurodollars? How do they relate to each other and what role do they play in the global markets for liquidity?

Answer 1

LIBOR :

The name itself is self explanatory: LIBOR, which stands for London Interbank Offered Rate. It is a standard interest rate at which major global banks lend to one another in the international interbank market for short-term loans.LIBOR is the average interest rate at which major global banks borrow from one another. It is based on five currencies including the US dollar, the euro, the British pound, the Japanese yen, and the Swiss franc and seven different maturities.The most commonly quoted rate is the three-month U.S. dollar rate, usually referred to as the current LIBOR rate.
The rate is calculated using the Waterfall Methodology, a standardised, transaction-based, data-driven, layered method.

EURO DOLLOR :

Eurodollars refer to dollar-denominated accounts at foreign banks or overseas branches of American banks.The eurodollar market is one of the world's biggest capital markets and consists of sophisticated financial instruments.

As mentioned above that the Libor is based on 5 Currencies includes U.S Dollor ,Euro, British Pound, Japanese YEN and Swiss Franc. They are major currencies.
So, Euro Dollor and Libor is interconnected.

LIBOR is administered by the Intercontinental Exchange.which asks major global banks how much they would charge other banks for short-term loans.So, higher the Libor rate lower will be the liquidity as cost increased.
and vice versa.