No because to really hold USD, your bank would need its own account on FedWire [1] (USD's Real Time Gross Settlement) in which money is legally guranteed. Alternatively your bank can have an account with a bank (called Correspondent Bank) that have account on FedWire.

Any more indirections would be too risky. If your bank has neither, then no other bank would talk to your bank over SWIFT/CHIPS/RIPPLE/etc, making your bank basically banned from USD banking.

Usually and and in this case, even accusations or investigation of money-laundering/etc would make a CB to derisk [2][3] and proactively cancel account of accused bank or CB would risk access to FedWire. This is how USG was able to force FATCA over the world.

[1] https://www.federalreserve.gov/paymentsystems/fedfunds_about...

[2] https://google.com/search?q=correspondent+bank+de+risking

[3] https://www.americanexpress.com/us/content/foreign-exchange/...

> Any more indirections would be too risky.

I'm not sure this is quite true. There is a thriving and legitimate market in "eurodollars", deposits denominated in US dollars but held outside the US, and specifically beyond the reach of US authorities.

The question is whether you would be able to make much use of such deposits without US cooperation. It would definitely be difficult, but it might be possible. I am by no means an expert on this, but i came across an interesting case from the '80s - Libyan Arab Foreign Bank v Bankers Trust Co. Section 3.4 of this book describes it:

https://books.google.co.uk/books/about/Freezing_Assets.html?...

And there's a wider discussion here:

http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?a...

The upshot is that a UK judge decided that it was possible to pay out a dollar balance held in London without involving the US. It seems there were several plausible ways to do it. Whether that's still true, i have no idea. Interesting stuff, anyway.

I am just reading off internet too. So I may be wrong.

In large indirections (or nesting), there is risk for both depositer and CB. Depositer would have to trust more banks in the chain. For CB nesting means harder to be KYC/KYCC/AML complient [1]. Due to the recent and growing derisking phenomena, nesting is not going to survive.

Eurodollar reads like just another name for correspondent banking, which was also used to escape USA regulations. But no longer works. In 2016, BofA dropped Belize Bank (largest bank by assets) after 35-yrs of relationship with no explaination other than regulatory pressure [2]. And thats how USG get a bank whereever it might be.

Regarding "a dollar balance held in London", unless you mean hard cash, the amount is just a ledger entry in FedWire. So US is very much involved [3].

[1] https://bizfluent.com/info-10002124-correspondent-payable-th...

[2] https://www.reuters.com/investigates/special-report/usa-bank...

[3] https://en.wikipedia.org/wiki/Society_for_Worldwide_Interban...

It they can't do any deals or transactions denominated in dollars with any other financial institutions with links to the US, which is most of them. That also means the ones left that they can deal with can pretty much charge whatever they like.