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That is to say, a letter of credit is a payment method used to discharge the legal obligations for payment from the buyer to the seller, by having a bank pay the seller directly. Thus, the seller relies on the credit risk of the bank, rather than the buyer, to receive payment.
The Uniform Customs and Practice for Documentary Credits (UCP) is a set of rules on the issuance and use of letters of credit. The UCP is utilized by bankers and commercial parties in more than 175 countries in trade finance. Some 11-15% of international trade utilizes letters of credit, totaling over a trillion dollars (US) each year.
The International Finance Corporation ( IFC) is an international financial institution that offers investment, advisory, and asset-management services to encourage private-sector development in less developed countries. The IFC is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States.
A letter of credit is a written document from a bank guaranteeing the seller of a product or service will be paid as long as the goods or services are provided, as specified. Letters of credit are ...
Acceptance credit. An acceptance credit is a type of letter of credit that is paid by a time draft authorizing payment on or after a specific date, if the terms of the letter of credit have been complied with. The bank "accepts" bills of exchange drawn on the bank by the debtor, discounts them and agrees to pay for them when they mature.
A circular letter of credit was a letter of credit issued by a bank or related financial institution to a private person, usually an individual of means, which enabled that person to draw funds from correspondent banks while traveling. This was considered safer than carrying large sums of cash. Early examples of the use of personal letters of ...
Documentary Credit World. Containing statistics, news items, and expert opinions regarding specific operational and legal issues concerning banking, international trade, and finance, Documentary Credit World is a monthly publication that reports on the development of Letter of Credit Law and Practice and related issues.
Demand guarantee. A demand guarantee is a guarantee that must be honoured by the guarantor upon beneficiary 's demand. The beneficiary is not required to first make a claim or take any action against the obligor of the guaranteed obligation that the guarantee supports. A demand guarantee is enforceable notwithstanding any deficiencies in the ...