Sunday, April 5, 2009

components international bank loans

it is useful to examine gross international bank lending in more detail .this lending essentially consists of three components:
1- Domestic bank loans in domestic currency to nonresident .this component would be exemplified by bank in France lending euros to a U.S firm for the firm is purchase of french exports.
2- Domestic bank loans in foreign currency to nonresidents .An example of this type of activity would be the lending of dollars by bank in France to U.S firm so that the firm could undertake the purchase of oil supplies from a Saudi Arabian exporter who wishes to be paid in dollars (oil prices are in fact quoted in dollars).
3- Domestic bank loans in foreign currency to domestic residents.This situation would be represented by bank in France lending dollars to french citizen for the purchase of a U.S Treasury bond

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