International
Settlement
L/O/G/O
Chapter One Introduction
 Concept
 Category
 Evolution
 Players and theirs roles
 Factors in payment decisions
 Characteristics and developing trend
 Correspondent banking relationship
Meaning of International Settlement
The financial activities conducted among different
countries in which payments are effected or funds
are transferred from one country to another in
order to settle claims and debts,emerged in the
course of political ,economic or cultural contacts
among them.
Negotiable intsruments(票据):
bills of exchange, promissory notes, checks
Payment techniques:
remittances,collections, letters of credit, bank
guarantees, international factoring and forfaiting
Documents:
bills of lading,insurance policies, certificates of
origin, etc
Category of international settlement
• Trade settlement: payments for visible trades
• Non-trade settlement:
1、invisible trade settlement：
payments for services, technology transfer,
patents and copyright contracts, etc
2、financial transaction settlement：
buying and selling of financial assets, overseas
money-raising and investing
3、payments between governments：aids and grants
4、others: overseas remittances, inheritances, etc
Evolution of international settlement
• From cash settlement to non-cash settlement
• From goods trading to documents trading
• From direct payment between traders to
payment effected through a financial
intermediary
safety, high efficiency, low cost, standardization
• Electronic settlement
SWIFT CHIPS CHAPS FEDWIRE TARGET
SWIFT(Society for worldwide interbank financial
telecommunication)环球同业银行金融电讯协会
特点:标准化;安全可靠,自动加核密押;高速度,低费用.
业务分类:客户汇款(customer transfer);银行头寸调拨(bank
transfer);外汇业务(foreign exchange confirmations);托收业务
(collections);证券业务(securities);贵金属和银团贷款业务
(precious metals and syndication);信用证和保函(documentary
credits and guarantees);旅行支票(travelers cheques);银行帐单
处理业务(statements).
Players and their roles
• Exporter
to get prompt payment; minimize non-payment
risks
• Importer
to receive goods as ordered; pay as late as
possible
• Financial intermediary
to maximize revenues; credit risks associated
with financing extended to buyers or sellers
Factors in the payment decision
To exporters:
 protection against non-payment risks
by the importers, such as:
commercial risks, financial risks;
political risks; risks in control of title to
the goods,etc.
 convenience;
 cost;
 commercial competitiveness
Characteristics and developing trend
1.
2.
3.
4.
5.
6.
7.
the scale and scope of international settlement get greater
and greater
International lending and financing is closely combined
with international payments
On the basis of international customs and practice
International guarantees applied to international settlement
More diversified vehicle currencies
The proportion of commercial credit in international
settlement gets bigger
A much facilitated international banking network
connected with electronic telecommunication
Correspondent banking relationship
• Correspondent bank 代理行
the basis for cooperation of commercial banks all
over the world to fulfill international settlement
“a bank having direct connection or friendly service
relations with another bank.”
• Selecting a correspondent bank:
reputation and creditworthiness; size and financial
status; location; services offered by it; polices and
strength of it
The establishment of a correspondent bank
Correspondent arrangement
Control documents控制文件
Specimen of authorized signatures授权签字样本
Telegraphic test key/SWIFT authentic key密押
Schedule of terms and conditions费率表