1、International Settlement,Lecturer: shao xinli,Course teaching goal,This course is designed to help students to understand the fundamentals and basic methods of international settlement, grasp the basic skill of the international settlement practice operation. Its primary aim is to realize the purpos
2、e that “ learn, realize and get it“.,International Settlement,International Settlement : An OverviewInstruments of paymentRemittance & CollectionLetter of CreditDocumentsBanks letter of guaranteeInternational FactoringInternational Forfaiting,Chapter One,International Settlement An Overview,Teaching
3、 purpose,Find out about the concept, developing history and system of international settlement; grasp the concrete conditions of international settlement.,Focal and difficult points,The historical development of international settlement and its system; the fund clearing systems in major internationa
4、l financial centers.,Key terms,Settlement, International Trade Settlement,“Cargo Documentation“, “Performance Certification“, Control Documents, Correspondent Bank, Bank Account.,Content of Chapter One What is “International Settlement”The history of development of International SettlementCondition
5、of International Settlement,Commodity ProductionExchange of commodityCirculation of CommodityCirculation of Currency,1.1 What is“International Settlement”,1.1 What is “International Settlement” SettlementTo pay an obligation,1.1 What is “International Settlement” Balance of payment :Current accountG
6、oodsServicesIncomecurrent transfersCapital & Financial accountcapital itemfinancial item,International Settlement Financial activities conducted among different countries in which payment are transferred from one country to another , in order to settle accounts, debts, claims, etc. emerged in the co
7、urse of political, economic or cultural contracts among them.,1.1What is “International Settlement”,1.1What is “International Settlement” International Trade Settlementfinancial activities arisen from international commercial transactions. International Non-trade Settlement financial activities acro
8、ss the borders generated in the course of other economic,political and cultural contracts.,What are the costs of each method of financing and payment? Etc.,Key issues in international settlement:,Who bears the credit risks?,Who finances the transaction?,Who will bear transportation costs and risks?,
9、In what currency will payment be made?,What are the political and legal risks?,1.2 The history of development of International Settlement,Five Step Features: A. From Cash Settlement to Non-cash Settlement,B. From buying and selling of commodityto doing of documents,C. From direct settlement among bu
10、siness men to indirect settlement through banks,1.2 The history of development of International Settlement,Five Step Features: D.From simple trade term to complicated trade which connected with both delivery of goods and payment of proceeds,E. From paper documents to electronic documents,Major proce
11、sses of international trade?,Preparation for international trade ; Business negotiation and signing a contract; To fulfill the contract agreement and settlement of the proceeds.,Business negotiation,InquityEnquity (the act of requesting on the availability of specific products) Offer/Quotation (a pr
12、omise to supply goods on the terms stated) Counter Offer (offer made in reply to an offer made by somebody else ) Acceptance/Order (an offer to buy),Distribution Agency Consignment Auction Tender(bid) Counter trade Barter Trade Counter Purchase Compensation Trade Processing Trade,Business ways,Overv
13、iew of Incoterms.2000,p499,1.3 Condition of International Settlement,A. Correspondent Banking Relationships“Correspondent banks”A bank customarily gives anther bank advice on investment. Loans. Collection Procedure. Insurance practices. Pension And profit-sharing plan. Job problem. Theformer bank ,
14、called “Correspondent banks”,1.3 Condition of International Settlement,A. Correspondent Banking Relationships Services provided by Correspondents a. Collecting checks, drafts and other credit instruments b. Making loans or investments as agents for their customer banks c. Making credit investigation
15、s of firms that borrow in the open market d. Providing banks with funds in case of need,1.3 Condition of International Settlement,A. Correspondent Banking relationships,a. List of specimen of authorized signatures b. Telegraphic test keys c. Schedule of terms and conditions or tariff,Control Documen
16、ts,1.3 Condition of International Settlement,B. Accounts The accounts which banks maintain with each other Nostro Account - “ours” Vostro Account - “yours” Loro Account - “theirs”,1.3 Condition of International Settlement,B. Accounts Conditions for account: a. Minimum balance b. Interest rate of dep
17、osit c. Investment account d. Line of overdrawn and its interest e. Fee f. Others,How to set up accounting relationship between correspondent banks? a. Its reputation b. Its size c. Its location d. Its service e. Its fundamental policy f. Its physical features & quality of its personal g. Its moment
18、um of early start,1.3 Condition of International Settlement,C. Funds“ Convertible currency ”Currency of export 、import and the three party countrysoft & hard currencycurrency for settlement,1.3 Condition of International Settlement,D. Uniform Rules & Practicefor International SettlementURCUCPURCGUniform Law for Bills of Exchange and Promissory Note singed at GenevaUniform Law for Cheque singed at Geneva,
