The implementation of the economic cycle: freedom, trust, duty

If the option is received (for a premium) the buyer, then as a matter of choice may be, and the right to refuse to accept the exchange of goods. Here, premium – premium plays the role of compensation. Right out of the deal for the forward period, and may belong to the seller who pays a premium to the buyer.

4.4. Transaction «swap»

Today, the transaction «swap» – is the purchase or sale of currency under a fixed exchange rate, but at the same time the conclusion of the reverse forward transaction, and payment terms are usually not the same (deal «sell-buy» in the jargon of the foreign exchange market). The swap transaction is used to cover the currency risk, as well as a possible gain in the future.

For example, somebody buys dollars for rubles a month for delivery and immediately makes a deal to sell them. Forward selling rate (is percentage price premium dollar) is the subject of the contract.

For interbank relationships swap transaction – an exchange of obligations or requirements, a form of insurance against risk, diversification, and replenish reserves.

The swap agreements between central banks are foreign currency exchange amounts (loans) to the short term, the exchange, which decays to the acts of buying foreign currency (for the target of intervention) and resell foreign currency.

Such agreements are common between the U.S. Federal Reserve and central banks of European countries. European Monetary Cooperation Fund – a prototype of the European Central Bank – interacted with the participants of the European Community based on three-month renewable constantly swap agreements.

Swap transactions are widely used in the monetary and credit transactions to profit from the difference in interest rates, in transactions with other valuables, including gold.

4.5. Interest arbitrage

In practice, often there are situations when interest rates suddenly rise or fall, and the forward market has not reacted to them. Here lurk the richest opportunities for application of interest rate arbitrage: buying the currency of a country on the spot rate and selling it for a fixed rate with an additional profit arising from the difference in percentage. An arbitrage profit is temporary – it disappears when the change in forward rate equalizes competitive conditions.

4.6. Currency futures

Futures emerged in the form of contracts for the supply of food and raw materials at an agreed price by a certain date. The contracts themselves are traded on commodity exchanges. The list of «real» content of futures extended. In Russia, the common three-month futures contracts for delivery of petroleum and petroleum products.

A futures contract is the stock market where buy and sell packages of securities (treasury bills and bonds), deposits, foreign currency. The main mass of this financial future is a three-month currency future. Exposing the financial futures market, brokers usually inform the date of the contract and payment and interest rates. The benefit will depend on the buyer to exchange rate, which is made a contract, and interest on short-term bank deposits.

4.7. Exchange risk insurance

With the expansion of foreign exchange transactions in the general instability of monetary circulation is becoming urgent need for insurance of risks relating to exchange rate fluctuations. The system of measures to reduce currency losses called «hedging» (hedging – fence).

Forwards, options, swap transactions, futures – are the natural methods of short-term hedging. It is in itself a dual role of foreign exchange operations – profit and loss insurance. Banks seek to carry out operations to undesirable exchange rate changes, explore the possibility of compensation due to parallel or pre-emptive monetary actions.

Hedging through forward transactions involved in the Russian Vnesheconombank. He established a list of hard currency, which was carried out exchange risk insurance, the warranty period, the rates of commission.

Apart from hedging operations through currency, there are methods of direct insurance risks:

– Structural balance reserves. If the bank there are open positions on a range of currencies (and without that banks and other commercial structures practically cannot live), you should carefully monitor these rates so that the anticipation of devaluation, in time to the conversion of a declining currency, as well as get rid of unreliable stock values[39 - Фетисов Г.Г. Регулирование курса рубля и движение капитала // Деньги и Кредит. 2009. № 8. С. 55.].

– Manipulation of payment deadlines (leads and lags – lead and lag). When the expected sharp changes in exchange rates, the banks seek to manipulate the timing calculations: if the expected appreciation of the currency of payment, apply for early payment, and vice versa if you are going to depreciate, the payment delay. Such measures are used to pay for goods and services, transfer of profits, repayment of loans or interest payments, etc.

– Discounting of bills in foreign currency is a form of insurance of foreign trade, in which the bank assumes the risk of currency fluctuations, and the debtor's insolvency. Bill discounting is used in long-term transactions (for example, deliveries of investment goods).

There are other private forms of hedging: the formation of the bank and its customers of the insurance fund, inclusion in a trade or credit transaction so-called «multi-currency clause», implying the possibility of revising the currency of payment, consultancy services on part of the hedge, which the bank provides its customers, etc.

5. International settlements

5.1. The concept and means of international settlements

International operations – is the regulation of payments for monetary claims and liabilities arising from economic, political, scientific, technological and cultural relations between states, organizations and citizens of different countries.

Calculations carried out mainly by means of transfer in the form of entries in bank accounts. For this correspondent on the basis of agreements with foreign banks open correspondent accounts with banks «Loro» (through foreign banks in domestic credit institution) and «Nostro» (by the bank in a foreign bank).

Correspondent relations determine the order of payment, the fees, and methods of replenishment spent.

Since there is no global credit money taken in all the countries in the international accounts are used mottos – means of payment in foreign currency. Among them:

– Commercial bills of exchange (draft) – written orders for the payment of a sum certain person in a certain period, exhibited by exporters on foreign importers;

– Normal (ordinary) bills – debt obligations of importers.

– Bank bills – bills, bank exhibited this country to their foreign correspondents. Depending on the reputation of the banks' sphere of circulation of their bills is wider than commercial paper. Buying bank bills, importers exporters send them to repay their obligations.

– Bank Check – a written order to the bank to your bank – correspondent on the transfer of certain amount from its current account abroad to the check holder.

– Bank transfer – postal and telegraphic transfers abroad.

– Bank Cards – registered vouchers that entitle holders to use them to purchase goods and services on a cashless basis.

The system of international payment transactions using the so-called correspondent relationships with banks in other countries – the most common form of the transactions undertaken by commercial banks in the long-term philosophy[40 - Liker Jeffrey K. The Toyota way. 14 Management Principles from the World’s Greatest Manufacturer. – London: McGraw-Hill. 2004. – С. 71.].

Along with the national currencies of the leading countries used international currency unit – Euro and in a small amount of SDRs.

Gold, which is directly under the gold monometallic used as an international payment and means of purchase, in fiat credit money is used only as emergency money in the world of unforeseen circumstances. State if necessary resort to selling part of the official gold reserves of those currencies in which they expressed their international obligations. Thus, gold has been used for international payments indirectly through operations in the gold markets[41 - Матай Коши Возвращение к основам. Что такое денежно-кредитная политика? // Финансы & развитие. 2009. С. 46.].

5.2. The mechanism of international settlements

Trade implies equivalence, so transfer the object of trade is always accompanied by what lawyers call consideration[42 - Лисицын А.Ю. Эффективность системы валютно-правового регулирования внешнеторговой деятельности // Реформы и право. 2008. № 4.]. Foreign contracts provide for the transfer of goods, or documents that are forwarded by the bank of the exporter or importer's bank to the bank of the country – the payer to pay in a timely manner. The calculations are carried out by various means of payment used in international circulation: bills, checks, money orders, wire transfers.

When paying with foreign buyers interested exporter to export proceeds for goods and services as quickly as possible came to his account. It depends not only on the forms, but also on the types of calculations. Types of calculations used in the global foreign trade practices, are as follows:

– Payment in cash;

– Calculation of credit;

– Mixed (combined) calculations[43 - Долгов С.И. Кретов И.И. Предприятие на внешних рынках: Внешнеторговое дело. – М.: Издательство БЕК. 1997. – С. 484.].

Schematically, the mechanism of international payments is as follows:

– The importer buys from a bank wire transfer, cashier's check, promissory note or other payment document and sends the exporter;

– Exporter receives payment from the importer, this paper and sells it to his bank for local currency, which it needs for production and other purposes;

– The exporter's bank sends abroad its correspondent bank payment document;

– From the sale of this document, amount of foreign currency is credited by the bank of the importer to exporter's bank's correspondent account.

This mechanism allows for international settlements through correspondent banks by offsetting counterclaims and obligations without the use of cash.

Banks tend to support the necessary foreign exchange positions in different currencies according to the structure and timing of payments, as well as carrying out monetary and financial conditions and payment of foreign trade transactions include the following elements: