BANKING AFFAIRS

Detailed explanation-1: -Banks aid international trade with guarantees on international payments thus reducing the risk of trade transactions. Services offered by some individual banks include foreign exchange, traveler’s checks, letters of credit, documentary collections, bank guarantees and electronic funds transfer to their customers.

Detailed explanation-2: -Banks are important facilitators of international trade. Besides providing liquidity they guarantee payment for around a fifth of world trade, in particular when the contract enforce-ment of the importing country is weak.

Detailed explanation-3: -International trade transactions are facilitated by international financial payments, in which the private banking system and the central banks of the trading nations play important roles.

Detailed explanation-4: -It is an arrangement in which a bank, acting on the instructions of its customer, is to make payment to a third party against certain stipulated financial or commercial documents-or both.