Letters of credit: Retreat from open account?

One area of increased interest in the wake of the credit crunch is traditional trade financing products such as letters of credit (LC). In recent years, trading has increasingly moved to open account rather than LC in a bid to lower costs. But Tan Kah Chye, global head of trade finance at Standard Chartered in Singapore, says that as supply chain participants have become cautious about the financial stability of their trading partners they have once again begun to consider LC.

Towards fewer, stronger chains? As Stuart Nivison, head of trade and supply chain, Europe, at HSBC in London, notes, the move to open account from LC has been driven by a benign credit environment where counterparty risk was seen as minimal and could be financed cheaply....

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Letters of credit: Retreat from open account?

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Letters of credit: Retreat from open account?

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