Money and Banking - Financial Entities and Payment Methods

Vocabulary flashcards covering financial entities, banking structures, international payment methods, and documentary credit terms based on lecture notes.

Spread (Bank Margin)

The profit generated by a bank, calculated as active rate minus passive rate ($\text{Spread} = \text{Active Rate} - \text{Passive Rate}$).

On-shore Funding

Local funding sought from a bank located within one's own country.

Off-shore Funding

Foreign funding sought in foreign currency from a bank in another country via a correspondent bank.

First-Category Financial Entities

Financial intermediaries regulated by the BCRA, which include commercial banks (serving SMEs, individuals, or multinationals) and Development or Fostering Banks (BICE).

Second-Category Financial Entities

Entities regulated by the CNV that provide services within the capital market, such as investment banks, merchant banks, insurance companies, and capitalization societies.

Third-Category Financial Entities

Specific intermediaries of financial and non-financial services, including trusts (fideicomisos), factoring, leasing, and currency exchange houses (casas de cambio).

Correspondent Bank

A bank located in the financial center of a currency that provides funding, acts as a wholesale intermediary between banks, and serves as the account where funds are debited and credited.

Payment Order (Orden de Pago)

An instrument through which a bank, acting on behalf and by order of a client, instructs another bank to pay a specific sum of money to a beneficiary.

GAFI Filter

A primary filter applied at the paying correspondent bank to screen transactions for money laundering, drug trafficking, or high-risk sanctioned and monitored countries.

Documentary Collection (Cobranza Documentaria)

An operation governed by Brochure 522 where a remitting bank in the exporter's location sends commercial documents to a collecting bank in the importer's location to be presented for payment or acceptance.

Bill of Exchange (Letra de Cambio)

A negotiable financial instrument through which a drawer (exporter) instructs a drawee (importer) to accept a debt obligation in order to retrieve commercial documents.

Documentary Credit (Crédito Documentario)

A payment instrument governed by Brochure 600 in which an issuing bank commits to pay a beneficiary/exporter a specific sum, provided all required conditions and documents strictly comply.

Issuing Bank (Banco Emisor)

The bank that issues a documentary credit at the request of an applicant (importer) or on its own account.

Advising Bank (Banco Notificador)

The bank that notifies the documentary credit to the beneficiary at the request of the issuing bank.

Confirming Bank (Banco Confirmador)

The bank that adds its confirmation or guarantee to a documentary credit with the authorization or at the request of the issuing bank.

Nominated Bank (Banco Nominado)

The bank in which the documentary credit is available, where documents are presented or utilized in the exporter's location.

Presentation / Utilization (Presentación / Utilización)

The delivery of commercial documents under a documentary credit to the issuing bank or nominated bank.

Complying Presentation (Presentación conforme)

A presentation of documents that conforms to the terms and conditions of the credit, applicable ICC rules, and international standard banking practice.

Negotiation (Negociación)

The purchase by a nominated bank of a bill of exchange drawn on a bank other than the nominated bank and/or complying documents by advancing or agreeing to advance funds.