The domain of international trade
In many countries, international trade represents a significant portion of the gross domestic product (GDP), making an exchange of capital, goods, and services between untrusted parties spread across the globe a necessity. While economic organizations such as the World Trade Organization (WTO) were formed specifically to ease and facilitate this process, differences in factors such as economic policy, trade laws, and currency ensure that carrying out trade internationally can be a complex process, with several entities involved across countries. A letter of credit exists to simplify this process. Let’s take a look at how it works.