1、 Lecturer: shao xinli. Course teaching goal This course is designed to help s t u d e n t s t o u n d e r s t a n d t h e fundamentals and basic methods of international settlement, grasp the basic skill of the international settlement practice operation. Its primary aim is to realize the purpose th
2、at .International Settlement International Settlement : An Overview Instruments of payment Remittance & Collection Letter of Credit Documents Banks letter of guarantee International Factoring International Forfaiting.Chapter OneInternational SettlementAn Overview.Teaching purpose Find out about the
3、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 international financial centers.Key ter
4、msSettlement, 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 ofInternational Settlement Condition of International Settlement.Comm
5、odity ProductionExchange of commodityCirculation of CommodityCirculation of Currency1.1 What is“International Settlement”.1.1 What is “International Settlement” Settlement To pay an obligation .1.1 What is “International Settlement” Balance of payment : Current account Goods Services Income current
6、transfers Capital & Financial account capital item financial 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 course of political, eco
7、nomic or cultural contracts among them.1.1What is “International Settlement”.1.1What is “International Settlement”International Trade Settlement financial activities arisen from international commercial transactions.International Non-trade Settlement financial activities across the borders generated
8、 in the course of other economic,political and cultural contracts.vWhat are the costs of each method of financing and payment? Etc.Key issues in international settlement:vWho bears the credit risks?vWho finances the transaction?vWho will bear transportation costs and risks?vIn what currency will pay
9、ment be made?vWhat are the political and legal risks?.1.2 The history of development ofInternational SettlementFive Step Features:A. From Cash Settlement to Non-cash Settlement B. From buying and selling of commodity to doing of documentsC. From direct settlement among business men to indirect settl
10、ement through banks.1.2 The history of development ofInternational SettlementFive Step Features: D.From simple trade term to complicated trade which connected with both delivery of goods and payment of proceedsE. From paper documents to electronic documents .Major processes of international trade? P
11、reparation for international trade ;Business negotiation and signing a contract;To fulfill the contract agreement and settlement of the proceeds. .Business negotiationnInquityEnquity (the act of requesting on the availability of specific products) nOffer/Quotation (a promise to supply goods on the t
12、erms stated)nCounter Offer (offer made in reply to an offer made by somebody else )nAcceptance/Order (an offer to buy) .DistributionAgencyConsignmentAuctionTender(bid)Counter trade Barter TradeCounter Purchase Compensation TradeProcessing TradeBusiness ways.Overview of Incoterms.2000 p499.1.3 Condit
13、ion of International SettlementCorrespondent Banking Relationships“Correspondent banks” A bank customarily gives anther bankadvice on investment. Loans. CollectionProcedure. Insurance practices. PensionAnd profit-sharing plan. Job problem. The former bank , called “Correspondent banks”.1.3 Condition
14、 of International SettlementCorrespondent Banking RelationshipsServices provided by Correspondentsa. Collecting checks, drafts and other credit instrumentsb. Making loans or investments as agents for their customer banksc. Making credit investigations of firms that borrow in the open marketd. Provid
15、ing banks with funds in case of need.1.3 Condition of International SettlementCorrespondent Banking relationshipsa. List of specimen of authorized signaturesb. Telegraphic test keysc. Schedule of terms and conditions or tariffControl Documents.1.3 Condition of International SettlementThe accounts wh
16、ich banks maintain with each otherNostro Account - “ours”Vostro Account - “yours”Loro Account - “theirs”.1.3 Condition of International SettlementConditions for account:a. Minimum balanceb. Interest rate of depositc. Investment accountd. Line of overdrawn and its intereste. Feef. Others.How to set u
17、p accounting relationship between correspondent banks?a. Its reputationb. Its sizec. Its locationd. Its servicee. Its fundamental policyf. Its physical features & quality of its personalg. Its momentum of early start.1.3 Condition of International SettlementFunds “ Convertible currency ” Currency of
18、 export 、import and the three party country soft & hard currency currency for settlement.1.3 Condition of International SettlementUniform Rules & Practice for International Settlement URC UCP URCG Uniform Law for Bills of Exchange and Promissory Note singed at Geneva Uniform Law for Cheque singed at Geneva.
