InternationalSettlementJuanYangBNUBusinessSchoolContentsIntroductionInstrumentsofInternationalSettlementRemittanceCollectionLetterofCreditOthermethodsofInternationalSettlementDocumentsUsedinInternationalSettlementPricetermsWhyshouldwestudythiscourseinEnglishAllthedocumentsandworkinglanguagesofinternationalpaymentsareinEnglish.Laydownagoodfoundationforthefuturework.ChapterOneIntroductionConceptCategoryBasiccontentEvolutionPlayersandtheirsroles1.1MeaningofInternationalSettlementthefinancialactivitiesconductedamongdifferentcountriesinwhichpaymentsareeffectedorfundsaretransferredfromonecountrytoanotherinordertosettleclaimsanddebts,emergedinthecourseofpolitical,economicorculturalcontactsamongthem.

CompanyAInChinaCompanyBInUSAmoneymachine1.2CategoryofinternationalsettlementTradesettlement:paymentsforvisibletradesNon-tradesettlementTradesettlement:paymentsforvisibletradesIntheprocessofinternationaltrade,attheheartofeverybusinesstransactionisthebuyerandtheseller.Bothpartieshaveonethingincommon:toprofitfromthetransactionandtoexposethemselvestotheleastriskpossible.Non-tradesettlement:invisibletradesettlement：

paymentsforservices,technologytransfer,patentsandcopyrightcontracts,etcfinancialtransactionsettlement：

buyingandsellingoffinancialassets,overseasmoney-raisingandinvestingpaymentsbetweengovernments:aidsandgrantsothers:overseasremittances,inheritances,etc1.3Basiccontentofinternationalsettlement Paymentmethods,financialinstrumentsandcommercialdocumentsarethethreeimportantandcloselyrelatedpartsininternationalsettlement.1.3.1PaymentmethodsPurchase/salescontractFortheseller:itimposesanobligationtodeliverthecontractedgoodsatthetimeandintheplaceandinthemannerprovidedforinthecontractwithamatchingrighttobepaidatthetime,intheplaceandinthemanneragreedoninthecontract.Forthebuyer:itgivesarighttoreceivethegoodscontracted,atthetime,intheplaceandinthemannerprovidedforinthecontract,plusanobligationtomakepayment,atthetime,intheplaceandinthemannerprovidedforinthecontract.Paymentmethodstosolve“when”,“where”and“how”.(i)RemittanceRemittance:transferoffundsfromonepartytoanotheramongdifferentcountries.Paymentinadvance:thebuyerplacesthefundsatthedisposalofthesellpriortoshipmentofthegoodsorprovisionofservices.Openaccount:alsocalledsaleoncredit,meansanarrangementbetweenthebuyerandsellerwherebythegoodsaremanufacturedanddeliveredbeforepaymentisrequired.(ii)CollectionAnarrangementwherebythegoodsareshippedandtherelevantbillofexchangeisdrawnbytheselleronthebuyer,anddocumentsaresenttotheseller’sbankwithclearinstructionforcollectionthroughoneofitscorrespondentbankslocatedinthedomicileofthebuyer.Cleancollection,documentarycollection(iii)LetterofcreditAnundertakingissuedbyabankfortheaccountofthebuyer(theapplicant)orforitsownaccount,topaythebeneficiarythevalueofthedraftand/ordocuments,providedthatthetermsandconditionsofthedocumentarycreditarecompliedwith.(iv)BankguaranteeAwrittenpromiseissuedbyabankattherequestofitscustomer,undertakingtomakepaymenttothebeneficiarywithinthelimitsofastatedsumofmoneyintheeventofdefaultbytheprincipal.1.3.2FinancialinstrumentsFinancialinstrumentsmainlyrefertobillsofexchange,promissorynotesandcheck.Theseinstrumentsaretheordersgiventothebankbyonetraderwhoasksthebanktomake/collectpaymentsto/fromtheothertrader.1.3.3CommercialdocumentsThemaincommercialdocumentsincludecommercialinvoice,packinglist,billoflading,insurancepolicy,inspectioncertificateandcertificateoforigin.Itisthedocuments,notgoodsthatrelevantpartiesaredealingwith.1.4EvolutionofinternationalsettlementFromcashsettlementtonon-cashsettlementFromgoodstradingtodocumentstradingFromdirectpaymentbetweentraderstopaymenteffectedthroughafinancialintermediarysafety,highefficiency,lowcost,standardizationElectronicsettlementSWIFTCHIPSCHAPSFEDWIRETARGETSWIFTSocietyforWorldInter-bankFinancialTelecommunication環(huán)球同業(yè)銀行金融電訊協(xié)會7000financialinstitutionsin192countriesbasedintheNetherlands,Hongkong,UKandUSFoundedin1973,BrusselsFunctions:Providemessagingservicestobanks,broker-dealersandinvestmentmanagers,aswellastomarketinfrastructures(meanshereclearingandsettlinghouse)incustomertransfer,internationaltradepayments,collections,securities,foreignexchangetransactions,preciousmetalsandsyndicationandsoon.Characters:Faster,morereliablecommunicationReducedtransactionerrorsLowertransmissioncostsGreaterefficiencyBetterstatisticsIncreasedsecurityCHIPSClearingHouseInter-bankPaymentSystemCHAPS--BritainClearingHouseAutomatedpaymentSystemTARGETTrans-EuropeanAutomatedReal-timeGrossSettlementExpressTransferSystemFEDWIREFederalReserveWireTransferSystemExporter

togetpromptpayment;minimizenon-paymentrisksImporter

toreceivegoodsasordered;payaslateaspossibleFinancialintermediary

tomaximizerevenues;creditrisksassociatedwithfinancingextendedtobuyersorsellers1.5Playersandtheirroles1.5.1FactorsinthepaymentdecisionToexporters:

protectionagainstnon-paymentrisksbytheimporters,suchas:commercialrisks,financialrisks;politicalrisks;risksincontroloftitletothegoods,etc.

convenience;

cost;

commercialcompetitiveness1.6FinancialintermediaryCorrespondentbanksSomeorganizationsrelevanttointernationalsettlementBankinginstitutionsDefinitionofcorrespondentbankServicesprovidedbycorrespondentbankControldocumentsInter-bankaccountsHowtoselectthebestbank

1.6.1CorrespondentbanksRepresentativeoffice(代表處)Agency（代理處）Foreignbranchbank（分行）Correspondentbank（代理銀行）Subsidiarybank（附屬銀行）Affiliatebank（聯(lián)營銀行）Consortiumbank（銀團(tuán)銀行）BankinginstitutionsRepresentativeoffice(代表處)LowestlevelNorighttodobankbusinessMainfunctionpublicrelations(provideinformationforbothcountries)Agency（代理處）Transferfunds,provideloan,L/C,remittancecouldnotdodepositbusinessForeignbranchbank（分行）CoulddodepositbusinessNotanindependentcompanyCorrespondentbank（代理銀行）thebasisforcooperationofcommercialbanksallovertheworldtofulfillinternationalsettlement

“abankhavingdirectconnectionorfriendlyservicerelationswithanotherbank.”

Subsidiarybank（附屬銀行,子銀行）Whenabankcannotsetupbranchinstitutionsabroad,itwillgenerallybuyallormostofthestocksofaforeignbank.Coulddoalltherelatedbusinessthatlocalbankcouldworkon.AnindependentbankAffiliatebank（聯(lián)營銀行）Thestocksareprocessedbyseveralinvestorsindifferentcountriesandnotasingleinvestorinaparticularcountrycouldownmorethan50percentstocks.AnindependentbankConsortiumBank（銀團(tuán)銀行）Abanksetupbyseveralbanksthatmaybeheadquarteredindifferentcountries.ConsortiumbanksarecommonlyformedinEurope.Aconsortiumiscreatedtofulfillaspecificprojectorgoalortocompletedeals,suchassellingloansforaclientintheloansyndicationmarket.Whenthedealiscompleted,theconsortiumbankdisbands.CorrespondentbankFunctions:Collectingchecks,drafts,andothercreditinstruments;Makingloanorinvestmentsasagentsfortheircustomerbank;Makingcreditinvestigationsonfirmsthatborrowinopenmarket;Providingbankswithforeignexchangefacilities;Providingbankswithfunds/loansincaseofneed.CorrespondentarrangementControldocumentsSpecimenofauthorizedsignatures（印簽樣本）Telegraphictestkey/SWIFTauthentickey(密押)Scheduleoftermsandconditions（費(fèi)率表）EstablishmentofacorrespondentbankCorrespondentbankrelationshipandinter-bankaccountrelationshipNostro(往帳)andvostro(來帳)accountInter-bankaccountsBankABankBBankABankBCurrenta/cCurrenta/cCurrency:bankBCurrency:bankANostro:oura/cwithyouVostro:you’rea/cwithusInter-bankaccountissimilartodepositoropenanaccountinabankHeredepositorisadepositorbankSamplesofreimbursementmethodseg:“Incover,wehavecreditedthesumtoyouraccountwithus.”;Means:increasesomemoneyinyourVostroaccount

“Pleasedebitthesumtoaccountwithyou.”Means:decreasesomemoneyinyourNostroaccount

CasestudyMr.JohnSmithwasagraduateofMichiganMedicalCollege.Nowheisapediatricianworkingforachildren’shospital.HisaddressisWoosterStreet83NewYork.Hemaintainsacurrentaccount(A/C818140772)inUSDwiththeCitibankNA,NewYork.ThehospitaltransferssalarypaymentmonthlytoMr.JohnSmith’saccount.Uponreceiptofpaymentfromthehospital,theCitibankmakesthecredittoMr.JohnSmith’sA/C,issuinghimacreditadviceatthesametimeinthepurposeofinforminghisthearrivaloffunds.Forexample:onApril3,1996,thechildren’shospitalmadeabooktransferattheCitibankNewYorkintheamountofUSD4500toA/C818140772infavorofMr.JohnSmith.TheCitibankNewYorkdebitedtheA/Cofthechildren’shospitalandpaidUSD4500tothemselvesforcreditingMr.johnSmithvaluingApril3,1996.Aftertheentrieswereposted,theCitibankmailedthecreditadvicetoMr.JohnSmithatthegivenaddressofWoosterStreet83NewYorkconformingUSD4500hadbeencreditedtotheA/C.Acreditadviceshouldincludethefollowingitems:title,payer,beneficiary,amount¤cy,caluedateandmempCREDITADVICEDATE:060403BENEFICIARY:MrJOHNSMITH,WOOSTERSTREET83NEWYORK10026PAYER:THECHILDREN’SHOSPITALN.Y.MEMO:SALARYOFAPRIL06WEHAVECREDITEDYOURA/C818140772VALUE4500FORTHECITIBANKNANEWYORK.代理行合作協(xié)議式樣Agencyarrangement

reputationandcreditworthiness;sizeandfinancialstatus;location;servicesofferedbyit;policesandstrengthofit;physicalfeaturesandpersonnel;momentumofearlystartSelectingacorrespondentbank1.6.2SomeorganizationsrelevanttointernationalsettlementIMFTheWorldBankGroupTheInternationalChamberofCommerceTheICCCommissiononBankingTechniqueandPractice

Apaymentsystemisthemeanswherebycashvalueistransferredbetweenapayer’sbankaccountandapayee’saccount.Itincludes:1)policiesandprocedures,includingrulesforcreditinganddebitingbalance;2)amediumforstoringandtransmittingpaymentinformation;3)financialintermediariesfororganizinginformationflow,carryingoutvaluetransferinstructions,and