International payments settlements1.pptVIP

International payments settlements Financial activity conducted among different countries in which payments are effected or funds are transferred from one country to another in order to settle accounts, debts,chains. Credit instruments Negotiable instruments Bills of exchange Promissory notes Cheques Traveller’s cheque Certificates of deposit Treasury bills Treasury bonds Credit instrument A credit instrument is an obligation. And its used as money because it has value. And the value that it has, of course, is a value which is based upon its credit-worthiness, in other words, how much credit or how much credence people give to the promise which is actually written down. What Im receiving or using as an instrument for money purposes is somebody elses obligation. Their preparedness to do something for me which might be to give me fiat money. That could be the promise which is incorporated in the cheque or the bill of exchange. Negotiable Instrument A piece of paper representing ownership of a financial asset or debt, and capable of being traded in the money market; for example, bill of exchange, promissory note. Functions of a negotiable instrument A means of payments A credit instrument A negotiable instrument Parties to a negotiable instrument Drawer Drawee Payee Acceptor Endorser Endorsee Acceptor for honour Guarantor Holder Holder for value Holder in due course Bills of exchange An unconditional order in writing, addressed by one person(the drawer) to another (the drawee)and signed by the person giving it, requiring the drawee to pay on demand or at a fixed or determinable future time a special sum of money to or to the order of a specified person (the payee) or to the bearer. If the bill is payable at a future time the drawee signifies acceptance, which makes the drawee the party primarily liable upon the bill; the drawer and endorsers may also be liable upon a bill. Classification of a bill of exchange Bank draft Trade bill Trader’s acceptance