In a switch-trading arrangement, additional parties are brought into the picture and some of the exchanged goods are shifted to the new party, often for cash. When one party has an unwanted balance of goods to be received from a second party, a third party in need of the goods offered by the first party is found to purchase the available goods, with the proceeds going to the second party. For example:
Greece has accumulated the equivalent of $1 million of credit in Rumania through its sales of cotton and fresh oranges, but it has agreed to take Rumanian goods, which it does not want, as payment. It asks a bank in Vienna to act as its switcher. The bank offers the equivalent of $700,000 in hard currency for the overvalued Rumanian credit position. The Greeks accept the offer and purchase aircraft parts from Boeing in Seattle, something they wanted all along. The switcher finds a customer in Africa who is willing to accept the Rumanian canned goods if the price is right. If the switcher has done a good job, the prices will be acceptable to the Africans, and everyone will benefit.
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