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A negotiable order to pay a specified amount of money on a future date, drawn on and guaranteed by a bank. These drafts are usually drawn for international trade finance purposes as an order to pay an exporter a stated sum on a specific future date for goods received. The act of a bank stamping the word “accepted” on the draft creates a banker’s acceptance.

The acceptance represents an unconditional claim on the part of the owner and an unconditional liability on behalf of the accepting bank; the bank has a claim on the drawer, who is obliged to pay the bank the face value on or before the maturity date. By writing the word “accepted” on the face of the draft the bank carries primary obligation, guaranteeing payment to the owner of the acceptance.

Banker’s acceptances can be discounted in the secondary market, the discount reflecting the time to maturity and credit quality of the guaranteeing bank. Since the banker’s acceptance carries a banker’s obligation to pay (in effect “two-name paper”) and is negotiable, it becomes an attractive asset. Banker’s acceptances are always sold at a discount and have maturities of up to 270 days.

Source Publication:
IMF, 2003, External Debt Statistics: Guide for Compilers and Users – Appendix 1. Special financial instruments and transactions: classifications, IMF, Washington DC.


Statistical Theme: Financial statistics

Created on Thursday, August 1, 2002

Last updated on Friday, August 29, 2003