Final answer:
American businesses might want to hold Eurodollars primarily because many international transactions are conducted in dollars, allowing for ease in trade and protection against currency fluctuations. Eurodollar deposits are not FDIC insured, may offer higher interest rates, and are not heavily regulated. However, they generally have large minimum transaction sizes.
Step-by-step explanation:
Why might American businesses want to hold Eurodollars? The most compelling reason is that many commercial transactions and international contracts are denominated in dollars. This makes Eurodollars an attractive maneuver for businesses engaging in international trade. Holding assets in the currency in which transactions are conducted can reduce the risk associated with foreign exchange fluctuations.
It is important to note that unlike domestic deposits, Eurodollar deposits are not insured by the FDIC. However, they may offer higher interest rates due to the competitive global banking market. Moreover, they are not heavily regulated, providing some flexibility. Yet, the minimum transaction sizes for Eurodollar markets generally tend to be quite large, which may not suit consumers looking for smaller savings instruments.
Overall, American businesses may find Eurodollars to be a strategic asset in their portfolios, especially for those deeply involved in the global economy.