Clearing

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Russian: Клиринг


A clearing arrangement [1] (also called a bilateral clearing agreement) is a form of barter in which the counterparties (governments) contract to purchase a certain amount of goods and services from one another. Both parties set up accounts with each other that are debited whenever one country imports from the other. At the end of an agreed-upon period of time, any account imbalances are settled for hard currency, or by the transfer of goods. The clearing arrangement introduces the concept of credit to barter transactions, and means bilateral trade can take place and does not have to be immediately settled. Account balances are periodically determined and any trade imbalances are settled in an agreed-upon currency. It is known that last two decades bilateral clearing agreements have usually taken place between Third World and Eastern European countries. There are different fields of clearings: trading, banking, stock exchanging, currency exchanging. However, there is one type of clearing [2] that is in the center of the present article. This is a settlement system between the participants of foreign trade on the basis of international clearing agreements. An important actor of currency clearings are clearing banks that deal with accounting and offsetting assets and liabilities mentioned, can also lend to members clearing operations. Generally speaking, there are two different classes of international clearing arrangements in international trade:

  • 1 - Intergovernmental Clearing Agreement
  • 2 – International Clearing System

References

  1. Eun, Ch.S., Resnick, B.G. International Financial Management, McGraw-Hill, Irwin, - Ch. 20.
  2. Katasonov, V. International clearing - our answer to monetary and financial U.S. dictates. RUfacts - http://ru-facts.com/news/view/35377.html
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