The financial institutions, government agencies, and private associations and firms covered in Chapters 3-7 have all facilitated some aspect of trade financing for U.S. exporters. Their major objective during their many years of operations has been the expansion of U.S. exports. In many cases, one institution or agency has cooperated with another institution or agency to fulfill this objective. These collaborative efforts will be the focal point of this chapter. An evaluation of the benefits of this teamwork will be included in the discussion.
In Chapter 3, the role of commercial banks in the international trade finance system was examined. Commercial banks finance the vast bulk of international trade by making loans to either the exporter or the importer. When these loans are made with a letter of credit and a draft, the lending bank, in a manner cooperates with the short-term financial markets when it accepts the draft, thus creating a banker's acceptance, and then sells it at a discount into a banker's acceptance market where a dealer sells it to an investor specializing in these short-term negotiable instruments called banker's acceptances.
However, in recent years, use of the banker's acceptance has declined drastically. Other means of funding trade credits or reducing their