1. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS LESSON7-1 GOALS  Explain the role of money and currency systems in international business.  Identify factors that affect the value of currency. MONEY SYSTEMS AROUND THE WORLD

2. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 2 Money and Currency Systems What is money? Acceptability Scarcity Durability Divisibility Portability Why is money used? Medium of exchange Measure of value Store of value

3. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 3 Foreign Exchange Balance of payments Economic conditions Money supply and demand Risk Inflation Political Stability

4. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS LESSON7-2 GOALS  Discuss foreign exchange activities.  Describe the main activities of the World Bank and the International Monetary Fund. FOREIGN EXCHANGE AND CURRENCY CONTROLS

5. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 5 Foreign Exchange Activities Changing exchange rates The foreign exchange market Foreign exchange controls

6. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 6 Japanese Yen Per U.S. Dollar

7. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 7 International Financial Agencies The World Bank The International Monetary Fund (IMF) Analyze economic situations Suggest economic policies Provide loans

8. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS LESSON7-3 GOALS  Discuss payment methods and financial sources for international business transactions.  Explain other payment methods and financial documents used in international trade. CURRENCY TRANSACTIONS BETWEEN NATIONS

9. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 9 International Financial Transactions Foreign trade payment methods Cash in advance Letter of credit Sale on account Sources of international financing Short-term financing Long-term financing

10. © SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 10 Other Payment Methods and Financial Documents Promissory note Bill of exchange Electronic funds transfer (EFT) Commercial invoice Insurance certificate