Impressions Create Everything. The second type of money is fiat money , which does not require backing by a physical commodity. Instead, the value of fiat currencies is set by supply and demand and people's faith in its worth. Fiat money developed because gold was a scarce resource, and rapidly growing economies growing couldn't always mine enough to back their currency supply requirements. 3 For a booming economy, the need for gold to give money value is extremely inefficient, especially when its value is really created by people's perceptions. Fiat money becomes the token of people's perception of worth, the basis for why money is created. An economy that is growing is apparently succeeding in producing other things that are valuable to itself and other economies. The stronger the economy, the stronger its money will be perceived (and sought after) and vice versa. However, people's perceptions must be supported by an economy that can produce the products and ser...
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Letters of Credit Impact on Small and Medium Enterprises: Small or Medium Enterprises (SMEs) account for 99% of businesses in the UK. There were over 5.7 million SMEs active in 2018. Letters of Credit can help alleviate some of the cash flow constraints stemming from delayed and long payment terms from end customers. Large international companies are often culprits for late payments to SMEs, which can often put small companies at financial strain, or even out of business. What are the Benefits of Using a LC? Risk and trust are one of the major challenges when it comes to trade, be that domestic or international. The specificity and legal weight of Letters of Credit are a big advantage, given that they are accepted and acknowledged by 175 countries, reduce the risk of doing business overseas, and provide transparent collaboration between unknown parties. Finally, Letters of Credit provide better clarity on the transaction, as all of the goods or services supplied would be defined in det...
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