There have recently appeared claims that developments in the Eurodollar market have contributed substantially to the current expansion of the U.S. money supply (M1). These claims imply that the Eurodollar system is a source of monetary disturbances which the Federal Reserve System cannot offset. On the basis of these claims, it is sometimes then asserted that the recent weakness of the dollar in foreign exchange markets has been due to an expansion of M1 caused by transactions in the Eurodollar market.