History of Bank Instruments
Bank Guarantees are
traditionally used in trade finance, however some financial
institutions raise funds via bank instruments to facilitate project
finance. After WWII Governments, investment banks and other large
institutions used bank instruments to generate revenue to fund
projects that would help rebuild cities and it's infrastructure.
On
the main, bank instruments aim to provide assurance that payment can
be made should there be a default therefore if a client has funds in
a bank, the bank will guarantee money is in the account to cover
costs.. There are two types of "letter of credit. One which a
commitment on the supplier side (DLC) and one on the
buyer/beneficiary side (SBLC).
