Short Note

 Short Note

1. Gold Standard

Gold Standard monetary system in which a country's government allows its currency unit to be freely converted into fixed amounts of gold and vice versa. The exchange rate under the gold standard monetary system is determined by the economic difference for an ounce of gold between two currencies. The gold standard was mainly used from 1875 to 1914 and also during the interwar years.


The use of the gold standard would mark the first use of formalized exchange rates in history. However, the system was flawed because countries needed to hold large gold reserves in order to keep up with the volatile nature of supply and demand for currency. After World War II, a modified version of the gold standard monetary system, the Bretton Woods monetary system created as its successor. This successor system was initially successful, but because it also depended heavily on gold reserves, it was abandoned in 1971 when U.S President Nixon "closed the gold window."

2.  SWIFT and SWIFT Code

SWIFT

Society for Worldwide Interbank Financial Telecommunications. Global communication network that facilitates 24-hour secure international exchange of payment instructions between banks, central banks, multinational corporations, and major securities firms. A member owned cooperative organized in 1977 under Belgium law, it now includes over 6,500 participating members from more than 180 countries which together process in excess of a billion messages every year (about 300 million messages every day).

SWIFT Code

Society for Worldwide Interbank Financial Telecommunication code. An internationally-recognized identification code for banks around the world. SWIFT codes are most commonly used for international wire transfers and are comprised of 8 or 11 alphanumeric characters. The International Organization of Standardization (IOS) was the authoritative body that approved the creation of SWIFT codes.

3.  Bill of Entry

A bill of entry is a formal declaration describing goods which are being imported or exported. The bill of entry is examined by customs officials to confirm that the contents of a shipment conform with the law, and to determine which taxes, tariffs, and restrictions may apply to the shipment. This document must be prepared by the importer or exporter, with many companies hiring a clerk specifically to handle the process of preparing bills of entry.


A typical bill of entry includes a description of the goods in the shipment, including details and the quantity of the goods, along with an estimate of their value. Customs officials reserve the right to inspect the shipment to determine whether or not it is consistent with the bill of entry, and discrepancies can be grounds for legal proceedings. Once a bill of entry has been reviewed and the shipment has been inspected, it can be cleared for sale or transfer. If there is a problem, customs may opt to confiscate the goods.

Many nations have specific laws about how bills of entry should be formatted and presented. It is important to have accurate documentation, or goods can be held up in customs. This can cause an inconvenience in some cases, and spoilage or destruction of the goods in others; a shipment of fruit, for example, will not hold up through a lengthy retention by customs while details of the shipment are worked out.


4. Definition of Foreign Direct Investment

Foreign Direct Investment refers to the investment done by a foreign individual or corporation in a country with the purpose of having an influence over the development of a firm’s long term strategy. This type of investment may also be referred as productive investment, as it is done in companies that are part of productive sectors of a country, be it industrial, financial or services.

According to the International Monetary Fund, “direct investment reflects the aim of obtaining a lasting interest by a resident entity of one economy (direct investor) in an enterprise that is resident in another economy (the direct investment enterprise). The “lasting interest” implies the existences of a long-term relationship between the direct investor and the direct investment enterprise and a significant degree of influence on the management of the latter”.