I. Definition of spot foreign exchange
Cash refers to free transactions in the international financial market, also known as "free foreign exchange". Foreign exchange widely used in international settlement and payment and freely convertible into other countries' currencies. The countries that issue these currencies have loose foreign exchange control and control, and some have even basically abolished foreign exchange control, while some countries have strict foreign exchange control, so their currencies cannot be freely converted into internationally used foreign currencies.
2. According to Article 8 of the Agreement of the International Monetary Fund, as a general obligation of member countries, a country's currency must meet three conditions before it can become a cash exchange:
1. There are no restrictions on the current account (trade and non-trade payments) and capital transfer in China's balance of payments.
2. Don't take discriminatory monetary measures or multi-currency exchange rates.
3. At the request of another member state, it is obliged to buy back the remaining domestic currency in the current account of the other party at any time.
A freely convertible currency is widely used in international exchange settlement, freely traded in the international financial market, and freely convertible into the currencies of other countries. In international trade, the import and export trade settled in these freely convertible currencies is called spot trade.
3. What does telegraphic transfer mean?
T/T is a trade term, which refers to sending money by telegram. T/T is a payment method in which the payer deposits a certain amount of money in the remittance bank, and the remittance bank sends it to the destination branch or correspondent bank (remittance bank) by telegram or telephone, instructing the remittance bank to pay a certain amount to the payee. Now it is gradually replaced by electronic remittance.
Extended data:
Settlement of foreign exchange has the characteristics of wide application, simple procedures, flexibility and convenience, and is a widely used settlement method at present.
1, remittance settlement, whether remittance or telegraphic transfer, has no limit on the starting point of the amount, and can be used regardless of the type of funds.
2. Settlement of foreign exchange is a kind of settlement method in which the remitter takes the initiative to pay in different places. It is very convenient for the transfer of funds, the clearing of old debts and the settlement of current accounts between superior and subordinate units in different places.
Remittance before delivery is also widely used in transaction settlement. If the sales unit lacks understanding of the credit status of the purchasing unit, or the goods are in short supply, the purchasing unit can remit money first, and then deliver the goods after receiving the payment, so as to avoid non-payment.
Of course, when the purchasing unit adopts the transaction mode of remittance first and then delivery, it should know the credit status and supply capacity of the sales unit in detail to avoid blindly remitting money and not receiving goods.
If you don't know the information and supply capacity of the sales unit, you can remit the money to the purchasing place, open a temporary deposit account at the purchasing place, and send someone to supervise the payment.
3. In addition to the transfer of funds between units, exchange settlement can also be used for units to pay related funds to individuals in different places, such as retirement wages, medical expenses, various labor fees, remuneration, etc. , and can also be used for related funds paid by individuals to units in different places, such as mail-order goods, books and periodicals, etc.
4. The settlement procedures are simple, which is convenient for units or individuals to handle.