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To make payment in dollars for the merchandise he has received from the United States, the foreign customer might purchase from his local bank a demand deposit held by his bank in a U.S. bank, then transfer the deposit to the U.S. exporter. As a result U.S. demand deposit liabilities to foreign residents (Le., foreign private short-term claims) would be diminished (debited). The payment by the foreign buyer would also cancel his obligation to the U.S. exporter, so that U.S. private short-term claims on foreigners would be reduced ( credited). The appropriate entries, preceded by the number (2), are on lines 21 and 24 of the table.
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