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ADDITIONAL METHODS OF INSURING AND FINANCING

30 November, 2015 - 17:39

The Foreign Credit Insurance Association provides U.S. exporters with low cost insurance against nonpayment by foreign customers due to either commercial or political reasons. Although the FCIA does not itself finance export receivables, the ability to assign the proceeds of the FCIA policy to a financing bank is a tremendous advantage to an insured exporter.

The Export Import Bank of the United States (EXIM) is an independent agency of the federal government whose primary function is to aid in financing and facilitating U.S. exports through dollar loans and assistance to exporters in the form of financing, guarantees, and insurance. It provides medium-term political and credit guarantees to financial institutions in the United States and to certain foreign financial institutions, and it cooperates with the FCIA in providing political and credit insurance for exporters. Anyone who is a purchaser of U.S. exports-including foreign private enterprises and foreign governments and their agencies-can borrow from EXIM if the money is spent in the United States and private capital is first sought.

Designed to finance large capital items such as aircraft, factories, and power plants, PEFCO (Private Export Funding Corporation) was formed by U.S. commercial banks and industrial concerns to mobilize supplementary capital from private channels. PEFCO purchases foreign buyers' debt obligations, financing these purchases through the sale of its own securities to private investors. This type of financing usually is for medium-to long-term maturities that carry an EXIM guarantee.

Founded by the Bretton Woods Economic Conference in 1944, the International Bank for Reconstruction and Development (World Bank) is owned jointly, but not equally, by 123 countries. The bank finances large projects in the less-developed countries over a period of years.