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International Money Transmission - Coggle Diagram
- International Money Transmission
Definition
Operational activities related to the currency conversion and transfer of funds between countries to settle claims and debt through banks
Flow
Remittance refers to the banks (remitting bank) with the authorization of customer (remitter), transfers a certain amount of money to correspondent bank (paying bank) to pay a named person (beneficiary) in that country.
Parties involved
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Intermediary Bank
- Transfer funds to beneficiary bank and collect funds from beneficiary bank
- Involves when r and b banks does not maintain account relationship
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Telegraphic transfer & Demand draft (no star, no write)
Nostro & Vostro
Nostro
My money in ur bank
- Derive from Latin word "Ours"
- Domestic bank that holds foreign currency at another bank in foreign country
- To facilitate foreign exchange transactions and holds customer's funds in foreign currencies
Vostro
- Derive from Latin word "Your"
- Foreign bank that holds domestic currency at another bank in domestic country
- To facilitate foreign exchange transactions and holds customer's funds in foreign currencies
Methods of transmission
- Bank accounts
- Central bank / clearing systems
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Currency conversions
Convertible currencies
- When the issuing country commits to redeeming it at current market rates.
- Freely traded in global currency markets
- Allowing participants to convert them into other currencies at market rates.
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