Risk Management Of Letter Of Credit

The letter of credit is the production of capitalism credit crisis, it comes into being along with the economy increasing and international trade development, with the processing not only in offering relative service but also offering credit agency and financing from banks. This payment fashion transfers bank's performing from obligation payment against documents which should be charged with the importer. So, the payment fashion not only assures the exporter to receive the payment for goods but also assures the importer to get hold of the documents after their payment in time. The method solves contradiction about faith between the importer and the exporter, meanwhile, it is also offering the advantage of financing. At the present time, the letter of credit has been changed to one of the most important fashion which be used widely in international trade settlement. In the seven seas economic trade, the station of the letter of credit could not be substituted.