What is Eurodollar CD primarily characterized by?

Eurodollar Certificates of Deposit (CDs) are primarily characterized by large dollar-denominated deposits accepted by banks outside the United States, particularly in Europe. These deposits are not subject to U.S. reserve requirements, allowing banks to operate with greater flexibility. The Eurodollar market is an essential component of the global financial system, as it provides a mechanism for businesses and investors to engage in transactions using dollars that are held outside the U.S. banking system.

The distinguishing feature of Eurodollar CDs is their international nature and the fact that they are denominated in U.S. dollars, which allows banks and other financial institutions to manage their liquidity in U.S. dollars in a more cost-effective manner. They commonly attract institutional investors seeking to invest in dollar-denominated assets while operating outside the United States.

This understanding of Eurodollar CDs emphasizes their role in global liquidity and international finance, making option B the correct choice.