国际结算理论与实务
（Theories and Practices of
International Settlements ）
主讲人：李颖
山东大学经济学院金融系
联系方式：grace.liying@163.com
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Reference books
《国际结算》第四版，苏宗祥，2009，中国
金融出版社；
 《国际结算》，秦定，2010，清华大学出版
社；


《国际结算：理论·实务·案例》，蒋琴，2007，清
华大学出版社。
Exercises in class
（20%）
Examination
Final tests In
English（80%）
International Settlement
Chapter1: Introduction On
Fundamentals In International
Settlements
Overview
Chapter2: Banks’ Clearing System
In international Settlements
International Settlement
Chapter3: Financial Instruments
used in International Settlements
Core
part
Chapter4: Mercantile documents
used In International Settlements
Chapter5: International
Settlement Methods
International Settlement
Chapter6: L/G and Stand-by L/C
extension
Chapter7: Financing methods In
International Settlements.
Chapter8: Bank Letters in
International Settlement
Chapter 1 Introduction on
Fundamentals in International
Settlements
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Definition
International payments or international settlements are
financial activities conducted among different countries
in which payments are effected or funds are transferred
from one country to another in order to settle accounts,
debts, etc., emerged in the course of political, economic
or cultural contacts among them.
spot payment—— payment between different
cities—— international payment.
International Settlement
International trade：
visible trade and invisible trade
contents
Financial transactions
Payment between governments
International Settlement
Objectives
safe
quick
convenient
Characteristics of evolution:
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cash settlement to transfer settlement and transaction of
documents;
Banks became the center in the international settlement at
the end of 18th century;
From payments under simple price terms to payments
under more complex price terms;
Chapter 1 Introductions on
Fundamentals in International
Settlements
computerization
SFNB,1996, USA;
Entrium Direct Bankers,1990,1998

International Settlement
Mail:
Letter, registered letter, express
delivery letter
Communication
means
Cable or Telex
Network: SWIFT
Chapter 1 Introductions on
Fundamentals in International
Settlements

SWIFT: society for worldwide interbank
financial telecommunications, a computerized
international telecommunications system that,
through standardized formatted messages,
rapidly processes and transmits financial
transactions and information among its
members around the world.
Chapter 1 Introductions on
Fundamentals in International
Settlements
–
Services provided by SWIFT:
FIN (Financial Application)
IFT (Interbank File Transfer)

Procedures of message flow:
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–
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An appropriate SWIFT message type is selected,
prepared, addressed and released by the sender to
the SWIFT network via the bank’s SWIFT
interface;
The message is then sent to the sender’s local
SWIFT Regional Processor;
Chapter 1 Introductions on
Fundamentals in International
Settlements
–
–
–
The input Regional Processor forwards the
SWIFT message to a Slice Processor;
If the message is properly formatted, it is sent to
the Receiver’s local SWIFT Regional Processor;
The output Regional Processor then sends the
message to the receiver.
Chapter 1 Introductions on
Fundamentals in International
Settlements
–
Types of messages: 10 types
Characteristics of SWIFT:
Quick and cheap;
Secure and reliable;
Standardized forms.

Signatures


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–
Credit
instruments
Mercantile
documents
Chapter 1 Introductions on
Fundamentals in International
Settlements
 Classification
methods
of settlement
 基于商业信用的结算（Settlement
on
commercial credit）——汇款
（Remittance），对应着预付货款（payment in advance）
和赊销（open account，O/A） ；托收（Collection ）
 基于银行信用的结算（Settlement on
bank credit）——信用证（letter of credit，
L/C ） ；银行保函（ bank guarantee ）
Chapter 1 Introductions on
Fundamentals in International
Settlements
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
payment in advance: provides greatest security for
the seller and greatest risk for the buyer; requires
that the buyer have a high level of confidence in
the ability and willingness of the seller to deliver
the goods as ordered.
open account, O/A，provides the least risk for the
buyer and the greatest risk for the seller.
Chapter 2 Banks’ Clearing System In
International Settlements
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1. Reasons for the establishment of banks’ clearing
system
objective reasons
subjective reasons
2. components
(1) global business web system


branches
correspondent bank: a bank having direct connection or friendly
service relations with another bank.
Chapter 2 Banks’ Clearing System In
International Settlements
Bank letter： a sample
Agency agreements: a sample
control documents:
Ⅰ lists of specimen of authorized signatures: for
authentication of the messages, letters, remittances,
letters of credit, etc.
Ⅱ telegraphic test keys: code arrangements that enable the
banks to receive cables from other banks to verify the
authenticity of cables or telexes.
Ⅲ SWIFT authentic key: for authenticating messages
transmitted through SWIFT;
Ⅳ terms and conditions.
Chapter 2 Banks’ Clearing System In
International Settlements
Services provided by correspondents:
Collecting checks, drafts, and other credit
instruments;
Making loan or investments as agents for their
customer banks;
Making credit investigation of firms that borrow in
the open market;
Providing banks with foreign exchange facilities,
including commercial and traveler’s checks;
Providing banks with funds/loans in case of need.
Chapter 2 Banks’ Clearing System
In International Settlements
(2) global foreign exchange transferring
system
nostro account: due from account, the foreign
currency account of a major bank with the foreign
banks abroad to facilitate international payments and
settlements.
Vostro account: due to account, the account held by
a bank on behalf of a correspondent bank.

Chapter 2 Banks’ Clearing System
In International Settlements
From the point of view of a Chinese bank, a nostro
account is our bank’s account in the book of an overseas
bank denominated in foreign currency; and a vostro
account is an overseas bank’s account with our bank
denominated in RMB.
Chapter 2 Banks’ Clearing System In
International Settlements
Ⅰ funds transferring system in China
Intra-city transfer between different banks;
Intra-bank transfer between different cities;
Inter-bank transfers between different cities.
 Ⅱ USD foreign exchange system:
– FEDWIRE: a fund transfer system operated
nationwide in the USA by the Federal Reserve
System to transfer funds from one financial
institution to another with an account balance held
with the Fed.

Chapter 2 Banks’ Clearing System In
International Settlements
Real-time gross settlement system: usually
operated by central banks, in which each payment
order is settled immediately upon its entry into the
system in its entire (gross) amount.
Chapter 2 Banks’ Clearing System In
International Settlements
Procedures of Fed Wire:
A payer gives an instruction to a bank in which the
payer has an available balance;
The paying bank passes instructions on to the Fed to
move value from the bank’s reserve balance account
to the reserve balance account of another bank in
which the payee has an account;
Chapter 2 Banks’ Clearing System In
International Settlements
The Fed credits the reserve account of the payee’s bank
and debits the reserve account of the payer’s bank. The
Fed Wire provides a confirmation number to the payer
so that the transaction can be traced;
When a bank receives an incoming wire, the receiving
firm is given notification that value has been received.
Chapter 2 Banks’ Clearing System In
International Settlements
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CHIPS( Clearing House Interbank Payment
System): a netting system operated by the New York
Clearing House Association.
A netting payment system: payment orders
debiting the accounts of participants are collected for a certain
time period, and then at the end of that time the net position is
calculated and cleared for each participant on the basis of the
payment orders sent and received.
Chapter 2 Banks’ Clearing System In
International Settlements
Advantages of netting payment system:
lower liquidity requirement that banks need in
order to settle payments of a specific value (only
the difference between the value of an individual
bank’s incoming and outgoing payments is
settled by transferring funds) ;
netting systems are more efficient from the point
of view of the communications and processing
capacity employed.
Chapter 2 Banks’ Clearing System In
International Settlements
Disadvantages of netting payment
system:
These systems expose participants to a
settlement risk, as they are implicitly giving each
other unsecured credit on the basis of payments
that are not immediately settled in final terms.
Components of CHIPS:
Chips participation (CP) and chips
universal identifier (CH)
Chapter 2 Banks’ Clearing System In
International Settlements
Procedures of CHIPS (P299):
member banks send instructions to CHIPS
regarding transfers that they wish to make to
other banks in New York City;
At the end of the business day CHIPS reports to
the Federal Reserve Bank of New York the net
amounts to debit and credit at each of CP.
Chapter 2 Banks’ Clearing System
In International Settlements
Euro foreign exchange system
 TARGET: Trans-Europe Automated Real-time Gross

–
Ⅲ
Settlement Express Transfer System, a real-time gross settlement
system for the Euro, which is composed of 15 national RTGS
systems, the ECB payment mechanism and interlinking.
National Real-time Gross Settlement, RTGS: Belgium
(ELLIPS), Germany (ELS), Greece (HERMES), Spain (SLBE),
France (TBF), Ireland (IRIS), Italy (BIREL), Luxembourg
(LIPS), Netherlands (TOP), Austria (ARTIS), Portugal (SPGT),
Finland (BOF); UK (CHAPS), Denmark (DEBES), Sweden
(RIX).
Chapter 2 Banks’ Clearing System
In International Settlements
–
EPM ( European Central Bank Payment
Mechanism)
Purposes of TARGET:
– to provide the payment procedures necessary for
implementing the ECB’s single monetary policy;
– to promote sound and efficient payment mechanisms
in euro。
Chapter 2 Banks’ Clearing System
In International Settlements
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Foreign exchange accounts with domestic
institutions
Foreign exchange accounts for current account
transactions
(1) foreign exchange working capital of domestic
entities in executing overseas construction and
other services contracts;
(2) foreign exchange overseas receipts and
payments to be made by domestic entities on
behalf of clients involved in overseas business;
Chapter 2 Banks’ Clearing System In
International Settlements
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(3) project funds of enterprises with exportimport license in business of export of
jumbo electronic equipment with total
project funds reaching a specified sum and
duration, or advanced and progress
payments for projects under international
bid;
(4) foreign exchange within an amount
verified by SAFE that is received by
international travel agencies and prepared
by foreign travel agencies;
Chapter 2 Banks’ Clearing System In
International Settlements
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(5) foreign exchange of foreignfunded enterprises within a balance
ceiling verified by SAFE;
(6) foreign exchange expenses of
foreign establishments remitted
from abroad.
Chapter 2 Banks’ Clearing System In
International Settlements
–
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foreign exchange account for capital account
transactions
(1) external borrowing by domestic entities
and foreign exchange loans of domestic
Chinese-funded financial institutions;
(2) foreign exchange of domestic entities for
repayment of principal of domestic and
external foreign exchange liabilities;
Chapter 2 Banks’ Clearing System In
International Settlements
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(3) foreign exchange of domestic entities
from stock issuance;
(4) capital paid in foreign exchange by
Chinese investors of foreign-funded
enterprises;
(5) foreign exchange remitted by overseas
entities or individuals for establishing a
foreign-funded enterprise.
Chapter 2 Banks’ Clearing System In
International Settlements

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The transactions on foreign exchange owned
by individuals:
(1) Foreign exchange owned by individuals
can be held, deposited in banks or sold to the
designated foreign exchange banks.
(2) Foreign exchange for private trip abroad
may be purchased up to an limit. Individuals
must apply to SAFE for the purchase of
foreign exchange exceeding the limit and
present to the customs office valid documents
for carrying foreign exchange exceeding a
limit.