Synthetic letters of credit: risk versus reward
19.02.2020 | Global Trade Review
The article discusses the opportunities and pitfalls presented by synthetic letters of credit (LCs), with some banks regarding them as capable of reducing risk and others avoiding them due to concerns over insolvency or fraud. Geoff compares LCs to Marmite; people either love them or hate them. Importantly, he emphasizes that broad variation across the synthetic LC market means banks cannot take a one-size-fits-all approach.