Risk Management Manual of Examination Policies - FDIC

INTERNATIONAL BANKING Section 11.1
who is usually the seller of the merchandise, against
delivery of documents specified in the credit.
Documentary Draft – A draft with documents attached
delivered to the drawee when it accepts or pays the draft,
and which ordinarily controls title to the merchandise.
Documents – Shipping and other papers attached to
foreign drafts, consisting of ocean bills of lading, marine
insurance certificates, and commercial invoices.
Certificates of origin and consular invoices may also be
required.
Documents Against Acceptance (D/A) – Instructions
given by an exporter to a bank that the documents attached
to a draft for collection are deliverable to the drawee only
against his or her acceptance of the draft.
Documents Against Payment (D/P) – Instructions given
by an exporter to his or her bank that the documents
attached to a draft for collection are deliverable to the
drawee only against his or her payment of the draft.
Dollar Exchange Acceptance – Time draft drawn by
central banks in specific foreign countries and accepted by
banks in the U.S. for the purpose of furnishing foreign
exchange. These instruments do not arise from specific
commercial transactions, rather they are designed to
alleviate shortages of dollar exchange for certain countries
specified in a list published by the Federal Reserve System.
It is anticipated that the acceptance will be liquidated
subsequently from dollar funds acquired by the central
bank. Limits are placed on initial maturity of drafts (three
months). Member banks may not accept drafts in an
amount exceeding 50 percent of paid-in and unimpaired
capital and surplus.
Domicile – Place where a draft or acceptance is made
payable.
Draft – A draft is an order in writing signed by one party
(the drawer) requesting a second party (the drawee) to
make payment in lawful money at a determinable future
time to a third party (the payee). Drafts occasionally may
be written to be non-negotiable, in that they will not meet
all the requirements of the Uniform Negotiable Instruments
Act. Drafts generally arise from a commercial transaction,
whereby the seller makes an agreement with a buyer in
advance for the transfer of goods. It may be accompanied
by a bill of lading, which the bank will surrender to the
buyer upon payment of the draft. The buyer may then
claim the goods at the office of the carrier who transported
them to the buyer's place of business. Drafts may be
classified as to time element, such as sight or presentation
drafts. A time draft is presented at sight, accepted, and
then paid on the agreed upon date which may be 30, 60, 90
days or longer after presentation and acceptance.
Dragon Bond – A bond issue by a foreign borrower in an
Asian or Pacific country excluding Japan.
Drawee – The addressee of a draft, that is, the person on
whom the draft is drawn.
Drawer – The issuer or signer of a draft.
Edge Act – An act passed December 24, 1919, as Section
25A of the Federal Reserve Act, with the title "Banking
Corporations Authorized to do Foreign Banking Business."
Edge Act Corporations are chartered by the Board of
Governors of the Federal Reserve System for 20 years with
a minimum capital of $2,000,000. Edge Act Corporations
finance international commerce, may operate interstate
branches, accept deposits outside the U.S., and invest in
non-U.S. firms. A nonbanking Edge Act Corporation
makes equity investments under Federal Reserve
Regulation K in foreign corporations, such as merchant
banks or finance companies. A banking Edge buys and
sells notes, drafts, and bills of exchange, and basically
complements the international banking activities of its
parent bank.
Eligible Acceptance – A bankers’ acceptance that meets
Federal Reserve requirements related to its financing
purpose and term.
Embargo – A partial or total prohibition on trade initiated
by the government of one country against another for
political or economic reasons.
Eurobank – A bank that regularly accepts foreign
currency denominated deposits and makes foreign currency
loans.
Eurobond – A medium or long-term debenture
underwritten by an international syndicate that is
denominated in a currency other than that of the country of
origin. Usually, a bond issued by a non-European entity
(Sovereign, large multinational company, or bank) for sale
in Europe. Instrument may also be called a global bond.
Eurocurrency – The nonresident ownership of one of the
major western European currencies. Eurocurrencies,
similar to Eurodollars, are frequently available for
borrowing in the London Interbank Market.
Eurodollars – Dollar deposit claims on U.S. banks that are
deposited in banks located outside the U.S., including
foreign branches of U.S. banks. These claims, in turn, may
International Banking (12-04) 11.1-36 DSC Risk Management Manual of Examination Policies
Federal Deposit Insurance Corporation