A foreign bank issues an undertaking to the exporter ( through a bank in the exporter’s country) to pay for the goods as long as the exporter complies with the terms and conditions of the contract. This is a much safer form of payment for the exporter. To be even safer, the exporter can arrange for the bank in his/her country to act as “ confirming bank”, which means that the bank in the exporter’s country is responsible for the transaction:
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