The Changing Business of Trust: Revisiting Letters of Credit’s Role in Global Trade

Global trade is changing fast—from supply chain volatility to evolving economic pressures—how can businesses ensure financial trust and operational resilience in global trade?

Our latest article, "The Changing Business of Trust: Revisiting Letters of Credit's Role in Global Trade," offers a timely and crucial look into why traditional Letters of Credit are more essential than ever. Discover how these instruments can help effectively mitigate risks, optimize cash flow, and support strategic capital investments amidst today's complex challenges.

Key Highlights

• Letters of Credit (LCs) remain highly relevant in today's global trade landscape, serving as indispensable tools for facilitating trade and capital expenditures despite being among the oldest trade finance instruments.
• Letters of Credit are categorized into two main types: Standby Letters of Credit (providing payment assurance in case of default) and Documentary Letters of Credit (ensuring payment upon presentation of shipping documents), both offering benefits like strengthening relationships and payment guarantees.
• Letters of Credit are instrumental in addressing current challenges such as enhanced surety in volatile global environments, strategic cash deployment, and adapting to modern financial advancements like longer tenors and secondary markets.

Empower your trade strategies. Read the full article to learn how these powerful tools can be your strongest asset and how Citi can help.