Development Study Of Domestic Letter Of Credit In The New Normal

The letter of credit is an international settlement tool which guarantees the beneficiary by written commitment of commercial bank.It is one of the main ways of the world trade settlement and of the trade financing.On August 1,1997,the "Measures of Domestic L/C" was issued by the People’s Bank of China.The implementation of the"Means" has enriched the methods of domestic settlement,and introduced the credit support of commercial banks in international trade.Also,with certain advantage in international trade of international L/C,domestic L/C has brought about revolutionary shift in the development of domestic trade.At the same time, China’s economy in the new normal also put further requirements for China’s traditional fanatical settlement business and brings new challenge for China’s commercial banks as well as China’s Domestic L/C. How to deal with the challenges and problems of China’s Domestic L/C in new economic environment of China and makes it get new chances to develop is a serious and important research subject.In this paper, the origin and relative concept of the credit was introduced firstly and China’s Domestic L/C’s current situation was analyzed by case study.Then the similarities and differences between China’s Domestic L/C and international L/C was compared and analyzed.Next, the comparison between Domestic L/C and other traditional settlement tools was done to come up with the strength and weakness of Domestic L/C. Then starting with the China’s economy in the new normal, China’s Domestic L/C’s external opportunities and threats were analyzed. After that, the development pattern was analyzed by SWOT analysis method. Finally,the product innovation and the future prospect of China’s Domestic L/C and its new regulations were analyzed.The main conclusion in this paper includes that for the development pattern of China’s Domestic L/C, the "SO" strategy should be chosen which means that China’s Domestic L/C should seize new opportunities in new normal and take the advantage of its strengths. On the other hands, Chinese commercial banks should also pay attention to the interactive development of Domestic L/C and cross-broader RMB L/C. The development of Domestic L/C’s electronization should also be realized. Lastly, Chinese commercial banks should develop more kinds of L/C product to satisfy Chinese enterprises’new requirements of transaction settlement in the new normal.