Moving beyond Letters of Credit in international trade finance.

For over a century, the Letter of Credit (LC) has served as the primary international trade financing tool. The LC owes its remarkable success to the fact that is has so effectively fulfilled its dual mission of minimizing risk and facilitating smoother trade transactions.

However, the LC was originally designed to address issues related to a global marketplace that, in many respects, have changed over time or no longer exist. A century ago, much slower methods of transportation and communication ensured that many exporters and importers rarely met, and the LC emerged as an optimal solution to their concerns about secure title transfer and payment.

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