Foreign exchange and international finance
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7. CHAPTER. Foreign Exchange and International Finance. 7-1 Money Systems Around the World 7-2 Foreign Exchange And Currency Controls 7-3 Currency Transactions Between Nations. GOALS. Explain the role of money and currency systems in international business.

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Foreign Exchange and International Finance

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7

CHAPTER

Foreign Exchange and International Finance

7-1Money Systems Around the World

7-2Foreign Exchange And Currency Controls

7-3Currency Transactions Between Nations


GOALS

Explain the role of money and currency systems in international business.

Identify factors that affect the value of currency.

7

LESSON 7-1Money Systems Around the World


What is money?

Acceptability

Scarcity

Durability

Divisibility

Portability

Why is money used?

Medium of exchange

Measure of value

Store of value

7

Money and Currency Systems


7

Foreign Exchange

  • Balance of payments

  • Economic conditions

    • Money supply and demand

    • Risk

    • Inflation

  • Political Stability


GOALS

Discuss foreign exchange activities.

Describe the main activities of the World Bank and the International Monetary Fund.

7

LESSON 7-2Foreign Exchange and Currency Controls


7

Foreign Exchange Activities

  • Changing exchange rates

  • The foreign exchange market

  • Foreign exchange controls


7

Japanese Yen Per U.S. Dollar


7

International Financial Agencies

  • The World Bank

  • International Monetary Fund (IMF)

    • Analyze economic situations

    • Suggest economic policies

    • Provide loans


GOALS

Discuss payment methods and financial sources for international business transactions.

Explain other payment methods and financial documents used in international trade.

7

LESSON 7-3Currency Transactions Between Nations


7

International Financial Transactions

  • Foreign trade payment methods

    • Cash in advance

    • Letter of credit

    • Sale on account

  • Sources of international financing

    • Short-term financing

    • Long-term financing


7

Other Payment Methods and Financial Documents

  • Promissory note

  • Bill of exchange

  • Electronic funds transfer (EFT)

  • Commercial invoice

  • Insurance certificate


7

A Commercial Invoice


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