Mercado libre de divisas y ventaja competitiva de la banca andorrana, 1945-1998

Abstract

This study examines the development of the Andorran banking industry during the second half of the 20^th century. Not having established any legal tender has historically meant the free movement of currency in the country. In this context, this work proposes that the possibility of maintaining Eurocurrency deposits in Andorran banks would have been one of its main competitive advantages to attract Spanish and French capital. To test this hypothesis, we compare the arbitrage opportunities shown by the major Eurocurrencies against the Spanish peseta and the French franc in the different exchange regimes experienced by both countries. The results show that, in all cases, Eurocurrency deposits in Andorran banks were more profitable than onshore deposits. At the same time, the opportunity cost of not moving capital to Andorra would have been higher for Spanish investors than for the French ones.